AuthorsBecky RoweDamon De IonnoDominique PetersHannah Wright

November 2015

Mind the gapConsumer research exploring experiences of financial exclusion across the UK

Acknowledgements

The research team at ESRO are extremely grateful to numerous individuals and or-ganisations for their valuable contributions to this project. Of most importance are the many individuals who shared their stories and experiences with us during the re-search process. Without their willing participation and candour this research would not have been possible.

We would also like to extend special thanks to those subject experts who kindly shared their time and knowledge to give additional context to this research – includ-ing representatives of the following organisations:

• Age UK• Barnardo’s• CAB• Consumer Council of Northern Ireland• DOSH• Friends, Families & Travellers• Homeless Link• Joseph Rowntree Foundation• Macmillan Cancer Support• Money Advice Trust• National Numeracy• NUS• Passcard• Prison Reform Trust• Rees Foundation• Royal British Legion• Scope• Scottish Refugee Council• Stepchange• Toynbee Hall• Unlock• Viridian Housing

• Barclays• Building Societies Association• Experian• Federation of Small Businesses• Financial Ombudsman Service

We’d also like to thank the team at the Financial Conduct Authority for their support throughout the research process, and Professor Sharon Collard for laying some of the groundwork for this research.

ESRO is a multiple award-winning, independent research and innovation consultancy that works with clients across the public, private and third sectors. We specialise in conducting research on com-plex and sensitive issues, and we are committed to designing and delivering projects that make sense of some of the most challenging research questions.

This research was led by Becky Rowe and Damon De Ionno. The research team comprised Hannah Wright, Dominique Peters, Catriona Hay, Evie Breese and Nick Lane.

1. Executive Summary 4

2. Introduction 9

3. Overviewof findings 11

4. Makingsenseof access 15

5. ‘TheMaze’–Process,requirementsandeligibility 21

6. ‘TheFog’–Marketnavigationandcomprehension 31

7. ‘TheVoid’–Physicalanddigitalbarriers 41

8. Conclusionsandrecommendations 48

9. Appendix 52

Contents

3

1. Executive Summary

1.1 Project overviewThis independent research was commissioned by the Financial Conduct Authority to shed new light on the consumer experience of issues associated with access to financial services. The objective was to explore in depth the nature of problems encountered by a range of different customers, experiencing different types of chal-lenges when accessing a variety of financial products and services.

As the culmination of a four-phase work stream undertaken by the FCA’s Consumer Insight department, the overarching aim was to bring new clarity to the causes and impact of these complex and challenging problems – helping the regulator to better understand how it might address access issues in future.

Fieldwork was conducted across England, Scotland, Wales and Northern Ireland between July and November 2015. The research was qualitative in nature and con-sisted of a number of different strands, including:

• 50 x qualitative depth interviews with consumers

• 28 x interviews with ‘expert’ representatives from a range of charities, consumer bodies, industry organisations and firms

• 6 x focus groups with consumers

In seeking to understand a range of different types of access issues, the consumer re-search focused on those who had experienced one or more of five problems:

• Digital and physical barriers

• Barriers to banking (notably the impact of Know Your Customer and Anti-Money Laundering)

• Barriers caused by credit file issues

• Barriers facing older mortgage borrowers

• Barriers to accessing insurance

1.2 Why access mattersAccess can feel like an overwhelmingly complex, even insurmountable, challenge. In covering a huge range of issues – from practical challenges of digital or geographic exclusion through to matters of ineligibility – the questions raised by the ‘access’ de-bate simultaneously demand consideration of the minutiae of process, technological and demographic trends, and big, society-defining decisions about who is entitled to what, and how financial inclusion should be achieved.

Just because the issue appears unwieldy, however, does not mean that the problems it causes should be ignored. Time and again, this research demonstrated how access issues clearly cause secondary complications or detriment to consumers. It revealed clear gaps in the market, with consumers in certain circumstances simply unable to find products to meet their needs – whether due to health conditions, geography, or simple questions of affordability. Furthermore, regardless of their actual eligibility or ineligibility for certain products, all consumers were at risk of difficulties in access-ing or navigating the market, understanding technical features or the reasons behind a rejection, or meeting the bureaucratic requirements of application and verification procedures (particularly in terms of identification).

Above all, the urgency of the issue lies in its ubiquity – spanning not just the whole customer journey, but all different types of consumer groups. Far from revealing a niche phenomenon, experienced exclusively by low-income groups or those living in

4 Mind the gap

anomalous circumstances, this research showed how access issues can affect all con-sumer segments, irrespective of digital capability, affluence or financial literacy. Almost all of us will have experienced an access issue at some point in our financial lives, and many of us are likely to face more serious access-related complications at some juncture.

1.3 Classifying access issuesIn seeking a simple classification of access issues which accurately reflects the con-sumer experience, our analysis allocated problems to three different layers:

• ‘The Maze’ – Process, requirements and eligibility

• ‘The Fog’ – Market navigation and comprehension

• ‘The Void’ – Digital and physical barriers

Key findings related to each layer are detailed below.

‘The Maze’ – Process, requirements and eligibility• There are often practical barriers to accessing financial products, in particular

relating to the provision of the required/requested ID documentation

• Staff often give consumers contradictory or limited information on their options, and messaging can change between firms, and even between branches

• Consumers can struggle to understand and use their products once they have purchased them

• A lack of explanation as to why someone has been denied a product – along with a lack of suggested alternatives – can lead to future self-limiting behaviours

• Issues relating to income, health and place of residence mean that, for some, there are simply no products available that meet their needs

‘The Fog’ – Market navigation and comprehension• Consumers can struggle to understand technical language used to describe

financial products and services

• There are also difficulties experienced by many when it comes to understanding not only the benefits of products, but their costs and exclusions too

• There are many myths around credit scoring that can impede access to mainstream credit, or consumers’ ability to improve their scores

• Consumers struggle to search for the most appropriate product, despite the advent of price comparison websites

• Those who are ineligible for products can have their difficulties compounded by the length of time it takes to establish their ineligibility

‘The Void’ – Digital and physical barriers• Practical exclusion of consumers from financial products and services is primarily

linked to physical access issues, or digital exclusion

• Older people, those with disabilities, and those living in rural areas, are most likely to struggle with physical access, due to branch closures and practical impediments

• The same groups are also more likely than others to experience digital exclusion, along with some low-income consumers

• A lack of access to the required technology, alongside a lack of confidence or computer literacy, can exclude some consumers from access to products and services

1.4 Causes and responsibilitiesIn attributing causes and identifying potential mitigations, this research has revealed a landscape which is effectively stuck in a kind of stalemate. Much of the discourse surrounding access issues – both at a personal level, between consumers and firms, and a macro level – is characterised by a ‘blame game’, in which all of the possible agents of change (consumers, firms, government/regulator) point the finger at each other, ‘pass the buck’, or simply remain silent. Much of the time, it is this stand-off which allows access issues to continue to occur and, in some cases, intensify.

Executive summary 5

Superficially, this state of affairs suggests a complexity to access issues which borders on the intractable – as if they are inevitable artefacts of the free market, to be tol-erated rather than solved. Our research, however, reveals this impression to be false. In truth, many of the problems documented in this research could have been easily resolved – benefiting firms and consumers alike – if simple changes had been made, particularly in terms of greater responsibility being taken by one or more parties. As for those which are more challenging, they too could have been mitigated (if not necessarily resolved in the consumer’s favour) if greater guidance and clarity had been offered to consumers at critical points in their journey.

Behind it all lies the question of responsibility: whose job is it to address any given issue? An important feature of the ‘layers’ classification of access issues is that the problems belonging to each layer are causally distinct – in other words, each lay-er exists independently of the others in terms of the nature of the problem, and what is required (and from whom) to solve it. A consumer may experience problems across one or more of the layers – and occasionally across all three as part of the same product journey – but no one party (whether firm, consumer or government/regulator) can realistically be expected to solve all types of consumer access issues.

The research has shown clearly that while some problems are caused by firms’ pol-icies, others arise from a dissonance between policy and frontline practice, while others still are the result of industry-wide impenetrability or inconsistency. Others may be regarded as the inadvertent consequence of rules and regulation designed to protect firms and/or consumers, while some are firmly the province of government

– notably hard-and-fast questions about entitlement, inclusion, infrastructure and what can fairly be expected from consumers in terms of digital or financial literacy.

1.5 Opportunities for changeLooking ahead, our detailed study of the problems experienced by consumers with-in each layer revealed a number of clear opportunities for different bodies – whether on the consumer, firm or regulatory/government side – to reconsider policies, prac-tices and procedures.

The table overleaf outlines key questions for each of these parties to consider.

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‘The Fog’ – Market navigation and comprehension

• Howcanfirmsensurethatfinancialproductsarecommunicatedandmarketedinawaythatmakesthemaccessibletoconsumers,usingplainEnglishandmakingT&Csasaccessibleaspossible

• Howcanfirmsmaketimetoensurecustomersarepurchasingproductswhicharesuitabletotheirneedsandcircumstances?

• Howcanfirmsbetterfacilitateeffectiveconsumersearches,sothatconsumersareaccessingthoseproductswhichbestmeettheirneeds?

• Howcanfirmsprovideproductswhichworkforthemcommerciallyandalsoplugthosegapsinthemarketwhereconsumersstruggletoaccessanyproducts?

•Whatcanconsumersreasonablybeexpectedtounderstandwhenitcomestofinancialproductsandservices?

• Howcanwebettersupportconsumerstomakeeffectivechoicesaboutfinancialproducts?

• Istheguidanceavailabletoconsumersaccessibleandappropriatetomeetthewiderangeofindividualneeds?

• Dowehaveunrealisticexpectationsofconsumerswhenevenpeoplewithgoodfinancialliteracystruggle–areweexpectingthemtoconductsearchesofthemarketbeyondtheirmeansandabilities?

• Canweprovidebetterframeworkstohelpconsumerscompareproductsandunderstandwhatisbestforthem?

• Howcanwebestsupportinnovationtoensurethatcomparisonandswitchingismadeeasieracrossthefullrangeoffinancialproducts?

•Whatisthebestwaytoensurefirmsareusingstandardisedlanguageandlessjargon,inordertoaidcomprehensiononthepartofconsumers?

• Howcanweclarifyresponsibilityaroundsign-posting,sothatconsumersareabletoconductthewidestpossiblesearchesofthemarket,andaren’tmissingoutonproductsthatmeettheirneedssimplybecausetheyareunawareoftheirexistence?

• Whoshouldconsumers(andtheirrepresentatives)turntowhentheysimplycannotfindaproductwhichmeetstheirneeds,andwhoshouldtakeresponsibilityforsuchgapsinthemarket?

Layer Firms Consumers Govt / Regulator / Other

‘The Maze’ – Process, requirements and eligibility

• Howcanfirmsbehonestandupfrontaboutexclusionsandrejections,withoutcompromisingtheirrulesandtheregulationinquestion?

• Howcanfirms/tradebodiesmonitorcustomerexperiencesofusingtheirproductsandservices?Forexample,thecustomerjourneyoftryingtofindsuitableand/oraffordableinsuranceproductswhicheventhemostsavvyofconsumersstrugglewith?

• Firmsneedtobettersupporttheirfrontlinestafftoensureallarecomfortableandfamiliarwithprocedures,andinformationandadviceisthereforeconsistentacrossbranchesandbetweenmembersofstaff.Whoisbestplacedtoencouragethis?

• Howcanstaffprovideappropriateadviceandsupportwhenconsumershavebeenrejected,inordertohelpthemimprovetheirfuturechancesofacceptance?

• Inwhatwayscanwebettersupportconsumerstomakeeffectivechoicesaboutfinancialproductsandfindproductsthatsuittheirneedswhenevenmainstreamconsumers,whohaverelativelygoodlevelsoffinancialcapability,struggle?

• Istheguidanceavailabletoconsumersaccessibleand/orappropriatetomeetthewiderangeofindividualneeds?

•Whatcanwereasonablyexpectconsumerstounderstandaroundrejections?

•Whenregulationisimposedonthefinancialservicesindustry,isthereclarityaroundwhattheexpectedindustryresponseis,andachancetoreviewanydifficultiesandunexpectedconsequences?

• Bothexpectedandunexpectedconsequencesofeventhebestintentionedregulationmustberegularlymonitoredandtracked.

•WhenitcomestoID,howcantheregulatorandgovernmentworktogethertocreateclarityaboutacceptabledocumentationand/orencouragefirmstobetterservethoseconsumerswithoutthemoststandardformsofID?

•Whatistheroleoftheregulatorand/orgovernmentwhenitcomestosupportingfirmstosignpostconsumerstoalternativeproviderswhentheyareunabletoprovideaproductorservice?

•Whatistheroleoftheregulatorandgovernmentwhenthemarketdoesnotseemtobeprovidingconsumerswithsuitableproductsatanaffordableprice,evenaftercomprehensivesearchesbymanyconsumers?

Executive summary 7

Layer Firms Consumers Govt / Regulator / Other

‘The Void’ – Physical and digital barriers

• Howcanfirmsmaketheirproductsasaccessibleaspossibleforexistingcustomers?

•Whatalternativesareonofferforthosewhocannotmakeitintobranchandarenotabletofindawaytousecurrentoptions?

• Shouldfirmsbedoingmoretocaterforexistingcustomersthatcannolongermakeitintobranch?

•Whatcanfirmsdotoreducethecomplexityinsecurityarrangementsandincreasetrustinremotebankingprovision(suchastelephone)?

• Howcanfirmsimprovearrangementsfortranslation?Andhowcantheyensurethattheseservicesareconsistentlyavailableandknownaboutbycustomer-facingstaff?

• Howcanwebettersupportcustomerstoobtainappropriatelegalprotectiontoensuretheircarersandfamilymembersareabletoactontheirbehalf?

•Whatmorecanwedotohelpandencourageconsumerstoforwardplanfortheirbankingneeds,ensuringtheyhavetheappropriateskillstomanageeffectivelyandindependently?

• Howcanwesupportthosewhoarecaringforotherstoseekoutandaccesshelpandguidancefromfirmswhentheyneedit?

•Towhatextentshouldweexpectconsumerstoembracedigitalchannels?

• Ifsomefinancialproductsaretobeconsideredessentialforfullparticipationinsociety,considerationmustbegiventotheaffordabilityoftheseproducts,witheffortsmadetoensureallareincluded,eventhoseonthelowestincomes.Whoseresponsibilityisittoensurethatnecessaryalternativesormeasurestoalleviatedetrimentareprovided?

• Howdoweensurethatgeographicisolationisappropriatelydealtwith,sothatconsumerslivinginruralareasarenotexcludedfromaccessingthefullestrangeoffinancialproductsandservices?

• Howdoweencouragethoseworkingonfuturetransportandhousingplanningtoconsideraccessandtheneedsofthosewithphysicalaccessissues?

• Howdoweensurethatthedigitalinfrastructureisinclusiveandaccessibletothosewhomaybenefitfromitthemost(e.g.thosefacingphysicalbarriers)?

8 Mind the gap

2. Introduction

2.1 ContextThe issue of ‘financial inclusion’ has come to the fore in recent years. Inclusivity requirements such as the EU Payments Accounts Directive, efforts by The G201 and UK Financial Inclusion Commission, and a notable recent report by the UK Financial Inclusion Commission2 (published ahead of the 2015 General Election) have all made a passionate and cogent case for greater financial inclusion. Government initiatives such as the agreement to reduce the fees charged on failed payments from basic bank accounts3 have further raised the profile of ‘access’.

The trend has been accelerated by significant external pressure, exerted both by ad-vocacy groups representing marginal, vulnerable or disadvantaged consumers, as well as an emerging consensus regarding the long-term importance and value of access to basic financial services.

At the same time, growing pressure is being placed on consumers to take more re-sponsibility for their lives and to make better plans for their financial futures. New polices such as auto-enrolment in pension schemes are intended to ensure people are saving adequately for retirement4, while reductions to welfare benefits aim to promote the value of work and independence5.

2.2 State of playTogether, these trends have meant that access to an ever wider range of financial services and products is being increasingly recognised as a pre-requisite for full par-ticipation in society. Yet whilst there has been some progress with financial provision over the years (e.g. introduction of basic bank accounts), evidence from a wide range of sources continues to suggest that a diverse range of consumers continue to strug-gle to access the most suitable financial products and services for their needs and circumstances. For example:

• Age UK suggested in their response to the FCA scoping work on access to financial services that “there are significant access issues for the regulator to study” when it comes to older people’s use of financial services6

• Considering the needs of victims of domestic violence, Citizens Advice Bureau recommended that “Creditor trade associations, individual firms and the Financial Conduct Authority should come together to write and agree best practice guidance to tackle financial abuse and support victims”7

• National Numeracy call for “support from government, the education sector, business and the media” to improve numeracy and financial literacy across the country8

1 https://g20.org/wp-content/uploads/2014/12/2014_g20_financial_inclusion_action_plan.pdf2 http://www.financialinclusioncommission.org.uk/3 https://www.gov.uk/government/news/new-basic-fee-free-bank-accounts-to-help-

millions-manage-their-money4 A New Pension Settlement for the Twenty-First Century, The Pensions Commission, November 20055 Universal Credit: Welfare that Works, Department for Work and Pensions, November 20106  Response to FCA scoping study of  access to financial services, Age UK, 17th April 20157 Controlling money, controlling lives: Financial abuse in Britain, CAB, November 20148  Response to the Financial Inclusion Commission’s consultation on the state of  financial inclusion in the 

UK, National Numeracy, December 2014

Introduction 9

• The Centre for the Study of Financial Innovation recommended that “the regulator should make more of its regard for access to financial services by clarifying the position on banking and insurance for former convicts”9 in their paper ‘Locked Out?’

• The Extra Costs Commission concluded that “where action by disability organisations cannot fully tackle this issue, there is a need for regulators and government to intervene where features of markets result in unfair extra costs for disabled people.”10

• The All Party Parliamentary Group on financial education for vulnerable young people recommended that financial institutions “signpost young people to appropriate support around managing their money, particularly when an account is first opened or if it is apparent that the account holder is in financial difficulty or requires support.”11

For some consumers the impact of this exclusion will be minimal, as they have the resources and ability to work around the problem. For others, however, it can be devastating – resulting in prolonged periods of difficulty, and having many knock-on consequences (e.g. inability to gain access to paid employment or ‘making do’ with-out appropriate insurance cover, despite understanding the need).

2.3 The purpose of this research This research was commissioned by the FCA to provide an independent examina-tion of the issues surrounding access to financial services. The main objective was to understand in greater depth the specific nature of the problems experienced by a broad range of individuals living across the UK.

This report marks the culmination of a four-phase work stream undertaken by the Consumer Insight department at the FCA. Beginning in September 2014, the work stream has reviewed existing research and evidence regarding the barriers faced by consumers in terms of access to financial services, followed by analysis to provide a sense of the numbers of people potentially affected by the various challenges iden-tified. Work has also been undertaken to explore the potential role of the FCA in addressing the identified access challenges, alongside that of the government and others.

This research was specifically intended to explore the impact of access challenges directly from consumers’ viewpoint – triangulating this evidence with the experi-ence and perspective of individuals from organisations who represent their interests, as well as some of those working within financial services. In addition, this report highlights consumer and expert perspectives on opportunities for change and im-provement that will help the financial services market to better address these issues.

Fieldwork was conducted in England, Scotland, Wales and Northern Ireland, be-tween July and November 2015. The research was qualitative in nature and consist-ed of a number of different strands, including:

• 50 x qualitative depth interviews

• 28 x expert interviews

• 6 x focus groups

9  Locked out?: Ex-offenders need better access to financial services, Centre for the Study of Financial Innovation, July 2015

10 Driving Down the Extra Costs that Disabled People Face, Extra Costs Commission, June 201511 Financial education for vulnerable young people: Report, All Party Parliamentary Commission,

October 2013

10 Mind the gap

3. Overview of findings

Access issues are extremely diverse and affect a broad range of different people, ranging from some of the most vulnerable to more ‘mainstream’ individuals with good financial literacy 

3.1 A diverse range of issuesThe research identified a diverse range of challenges, barriers and problems affect-ing a huge variety of consumers. Many consumers, both with good financial literacy and those who struggle to understand financial products and concepts, have experi-enced some form of struggle or challenge trying to access a financial product. Such problems do not solely affect those on a lower income, with many wealthier consum-ers also experiencing a range of access-related problems. The difficulties also span many different types of financial product – including bank accounts, general insur-ance and protection and various types of credit and lending products.

Examples of the range of evidence uncovered by the research include: an elderly couple living in rurally located sheltered housing and struggling to access any bank-ing locally (and resorting to using doorstep lenders which they know are far higher cost than they should be paying); cancer survivors desperate to get some respite in warmer climes who can’t find insurers willing to provide cover; and foreign entrepre-neurs moving to urban centres across the UK, but struggling to set up banking due to prohibitive ID requirements. The research clearly demonstrated that access issues have an impact on everyday banking and insurance transactions for many people, up and down the country.

3.2 Access issues leading to gaps in the marketSome of the experiences studied as part of this research clearly illustrate the exist-ence of ‘gaps’ in the market, which can arise out of a variety of access issues. These are instances where consumers are simply unable to find a product that adequately meets their needs, and fall into two broad categories.

Firstly, some consumers were unable to find any products that suited their needs, de-spite undertaking extensive research through all recommended channels. Common causes included income, health conditions and place of residence. In these instances, there were simply not any suitable products available across the industry.

Secondly, consumers struggled to understand where they should search for products to meet their needs. In such circumstances, consumers were unable to locate prod-ucts through online searches or telephone enquiries. Specialist providers were poorly signposted, if at all, by more mainstream providers, and perhaps not prevalent on price comparison websites.

Overview of findings 11

3.3 Strategies for overcoming access problemsAcross the research, we saw a lot of evidence of consumers investing significant amounts of time and effort into overcoming access issues – demonstrating high lev-els of resourcefulness and coming up with inventive strategies. For example, one new bank account applicant who was struggling to open an account simply visited as many branches of the same bank as he could until he found a member of staff who had a more ‘problem solving’ attitude. Indeed, some individuals had managed to ‘solve’ their access problem simply by chancing upon the ‘right’ staff member; a person with the necessary knowledge, resources or ‘creativity with the rules’ to find a route through a problem. Customers with these experiences were often unclear as to whether their ‘access problem’ was actually more of a ‘customer service’ problem

– as there was often some sense lingering in their mind that if they could find the right staff member, who would listen and properly understand their situation, then there could be a potential resolution.

Regularly, however, strategies for overcoming access problems involved reliance on a third party (often a close family member or friend, but sometimes also individu-als with more transactional relationships to the individual – such as hairdressers or neighbours). Examples of this dependency on others included formal measures like

‘Power of Attorney’ or ‘Special Guardianship’ arrangements, but were also often in-formal – a child or grand-child supporting someone who struggles with the internet to do online banking, getting someone else to take out a product or account in their name and ‘lending’ it to you, or borrowing money from an informal community money lending scheme. Amongst older and more vulnerable people, the research encountered numerous examples of individuals handing over their debit cards and pins to third parties in order to get support using an ATM or chip & pin machine.

In some cases individuals were worried about their relationship with this third party – often feeling a sense of dependence, but also sometimes anxious about the risk they put themselves in. Equally, however, in many cases individuals had become acclima-tised to the potential problems – often feeling that they had no alternative.

“If I go into the bank they direct me over to the machines and say, now Madam… and I just think, I can’t do this. I don’t really know what it is. They’ve shown me a lot of times, but I just don’t know. So I just give them my card and whisper the pin. What’s the difference me doing that in the bank, to me doing that with my neighbour? I probably trust my neighbour more.” (Consumer, Yeovil )

3.4 What’s fair? Many of those customers affected by access problems not only felt let down by the financial services industry, but also by those with the power to make change happen. At an individual level, individuals regularly suffered chains of problems as a result of being denied access to products – and were often unclear about the reasons why. Many blamed themselves for not being able to ‘find’ the right product or provider for them, despite often having invested a large amount of time in searching and making applications, some even resorting to consulting industry bodies and other advice-giv-ing organisations. Others simply felt that financial firms had decided that they were not good customers (despite their willingness to pay for products!) and had lost faith that any firm would want to service their needs.

Many of those who took part in the research were frustrated by financial service providers and exasperated by a market where, on the surface, there seemed to be a wealth of choice, but as far as they could tell, there was ‘nothing for them’. Some individuals described the powerlessness they faced at ‘not being able to buy’, as they themselves can do little about market provision, and their struggles with a lack of appropriate products did not have an obvious way of being documented, reported or otherwise communicated.

12 Mind the gap

“Who do you tell that you can’t get access to a product? You don’t ever really know why, or if it was something to do with you or if it’s even the right or the wrong decision? What would you say?

‘They wouldn’t sell me something.’ Isn’t it their right to refuse to sell you something if they choose to?’ (Consumer, London)

For those consumers who are often excluded from the market, financial isolation can become a part of daily life. The feeling that you are not wanted as a customer, or not the right kind of customer for mainstream firms, can lead to self-limiting and self-destructive behaviours. Some individuals we met exhibited a strong sense of learned helplessness – often as a result of unfruitful searching or poorly explained rejections. This sense of helplessness frequently resulted in consumers distancing themselves from the mainstream market, rightly or wrongly seeing themselves as not

‘the sort of person’ who could ever be catered for by ‘normal’ providers. In the case of credit products (where there seem to be many providers clearly targeting those who feel excluded from the mainstream), many had given up on the idea of ‘choos-ing’ or ‘selecting’ products – feeling that they would probably never have that luxury. Instead, many relied entirely on ‘opportunity’ or ‘chance’ provision – e.g. going with a provider simply because they were in the right place at the right time, and made an offer of service (e.g. responding to a pre-filled credit application sent through the post or a doorstep lender knocking on the door).

3.5 Whose responsibility is it?A key feature of the access ‘landscape’ to have emerged in this research is the ex-istence of a self-perpetuating stalemate. Much of the discourse surrounding access issues – both at a personal level, between consumers and firms, and a macro level

– is characterised by a ‘blame game’, in which all of the possible agents of change (consumers, firms, government/regulator) point the finger at each other, ‘pass the buck’, or simply remain silent. Much of the time, it is this stand-off which allows ac-cess issues to continue to occur and, in some cases, intensify. With no single authority determining which problems are attributable to whom, uncertainty persists on all sides. For example, it could be that there are simply consumers that fall into ‘gaps between providers’. Equally, willing providers may exist, but it might not be reasona-ble to expect consumers to invest the time and resources needed to seek them out. In the current climate, even ‘rules’ themselves can be interpreted in a range of different ways. Some issues we studied were seemingly caused by poor, inconsistent or overly stringent interpretation of existing guidance – perhaps highlighting a lack of clarity about how exactly firms (or individual staff members) should respond when faced with complex situations or customers who don’t fit a ‘standard mould’.

The upshot of this status quo is that access often feels like an impossibly complex, al-most intractable problem. Our research, however, suggests that this may be mislead-ing. When seen in plain view, many of the problems we documented could actually have been easily resolved – benefiting firms and consumers alike – if simple changes had been made, particularly in terms of greater responsibility being taken by one or more parties. As for those which are more challenging, they too could have been mitigated (if not necessarily resolved in the consumer’s favour) if greater guidance and clarity had been offered to consumers at critical points in their journey.

Overview of findings 13

Behind it all lies the question of responsibility: whose job is it to address any given issue? The research suggests that while some problems are caused by firms’ policies, others arise from a dissonance between policy and frontline practice, while others still are the result of industry-wide impenetrability or inconsistency. Others may be regarded as the inadvertent consequence of rules and regulation designed to protect firms and/or consumers, while some are firmly the province of government – no-tably hard-and-fast questions about entitlement, inclusion, infrastructure and what can fairly be expected from consumers in terms of digital or financial literacy.12

3.6 Opportunities for change On the one hand, consumers recognise that much progress has been recently made in improving the way firms interact with consumers (e.g. the benefits that online and mobile banking have brought to many consumers; the growing sophistication of price comparison websites and ‘product finders’). At the same time, those affected by access issues feel frustrated and trapped by a financial services market without any real choice, or range. Many feel that there is little to distinguish between products offered by different firms, and those features which are different are often difficult to understand and compare.

When asked ‘who is responsible for ensuring you have the product you need’, con-sumers automatically default to financial service providers and banks. From their perspective this makes sense: they are simply a customer wanting to buy a product

– the solution therefore should lie with the seller. Despite the problems they expe-rienced, consumers often highlighted to us their understanding of the benefits of competition in keeping prices low and, despite struggling with the array of choices available, did appreciate the fact that a diverse range of different kinds of products were available.

Few spontaneously thought about the government or state being involved, whether to encourage a wider provision or to itself provide products that meet more niche or specific needs. When they did, consumers often found the idea of government prod-ucts unappealing, both in terms of trust but also potentially in functionality. Despite sometimes feeling overwhelmed by the choices available in the current marketplace, consumers were deterred by the very basic service offering which they imagined government products would offer, lacking the sophistication or features available in the private sector. The idea of intervention or encouragement was more warmly received, although there were some concerns about the effects of government in-volvement on competition, which many perceived to be a founding tenet of the UK economy and financial sector.

The current reality, however, is that with no coordination of the market or duty to provide, consumers can too easily be left in limbo. Gaps between policy and practice leave consumers and firm staff unsure of their rights and responsibilities, and often solutions are only to be found in the form of individual staff members who are will-ing to bend the rules.

In seeking to resolve these uncertainties and inconsistencies, we classified the access problems we encountered according to a simple new framework which does justice to access issues as they are experienced by consumers. In so doing, we suggest a range of potential opportunities for reducing the impact of access issues on consum-ers and firms alike – being clear, wherever possible, about where the responsibility for different issues appears to lie.

12 In thinking about the opportunities for change and improvement we identified three main areas of responsibility: firms themselves, consumers and ‘others’ (government/regulator – combined into a single category to reflect consumer confusion around the division of responsibility between social policy and regulation). Throughout this report, we use this categorisation to frame opportunities for change.

14 Mind the gap

4.1 Different ways of discussing ‘access’Arguably the biggest obstacle to those seeking solutions for access-related issues is the sheer diversity of the phenomenon – spanning not only the entire customer journey (from product purchase to product exit), but also different product types and sectors. From the literature review and expert interviews conducted as part of this research, it is clear that this range gives rise to three distinct strategies among those seeking to address the issue of access:

• Generalism: Simply discussing ‘access’ and the consumer right to ‘access financial services and products’ in general terms

• Specificity: Dealing with single issues or groups of related issues, often discussing the needs of a particular group they impact

• Cataloguing: Listing out all the issues, which can feel overwhelming, jumbled and inconsistent

Whilst each of these approaches has its merits in different contexts, none achieves the balance of depth, breadth and structure needed to make sense of the access co-nundrum as a whole.

4.2 The ‘layers model’ of accessTo overcome these challenges, we have classified the problems highlighted to us by consumers in a framework which we’ve called the ‘layers model of access’. In essence, it’s sampling a grouping of access issues by consumer experience and out-come, rather than by demographic or product type. The layers themselves are not discrete, but overlap. They also can be experienced simultaneously during any given access problem – and this lack of clarity in itself is part of the point, as it is often unclear where the ‘blame’ lies. As one consumer searching for an insurance product said to us: ‘How do you know when you’ve fully exhausted the search? At what point do you stop?’ – highlighting that she felt her access problems might not just have been caused by lack of provision but by simply not having searched hard enough (despite, in this case, the customer actually devoting many hours to the search over a prolonged period of time and seeking professional advice).

For the purpose of this report, we’ve outlined three layers:

• ‘The Maze’ – Process, requirements and eligibility

• ‘The Fog’ – Market navigation and comprehension

• ‘The Void’ – Physical and digital barriers

An important feature of this classification is that the problems belonging to each layer are causally distinct – in other words, each layer exists independently of the others in terms of the nature of the problem, and what is required (and from whom) to solve it. A consumer may experience problems across one or more of the layers – and occasionally across all three as part of the same product journey – but no one party (whether firm, consumer or government/regulator) can realistically be expect-ed to solve all types of consumer access issues.

Prevalence of issues Each of the layers encompasses problems which are very common and affected a wide range of consumers in our research sample, while also including barriers which were more niche, and specific to a certain group of consumers. Whilst some consumers only experience one aspect of the numerous challenges posed by access,

4. Making sense of access

Making sense of access 15

others can experience a range of different issues and challenges from all three layers.

Consumers in the latter category can find it particularly difficult to extricate the cause of particular problems and to work out a solution. Those who, for exam-ple, experience a range of physical access issues due to rural location and disability, could also see their situation compounded by a lack of suitable photographic ID re-quired to open a new account. Others may lack access to a computer or the skills to research financial products online, and therefore, when faced with more expensive deals, feel priced out of insurance policies.

Together, the full range of access issues experienced by consumers and explored throughout this work pose a clear problem to the financial services industry, regula-tor and government, as well as to consumers themselves. It is clear that much work needs to be done in order to ensure the diversity of barriers and challenges is effec-tively addressed in the future.

NOTE: As well as identifying the access issues encountered by individuals, this report aims to con-sider the future of  financial access, and the responsibility which firms, consumers and others have in making this future fairer for all. For the purposes of  this report we have identified three groups where responsibility and a need for action might lie: consumers, firms, and the regulator/government. Clarity of responsibility is crucial if consumers are to avoid being passed from pillar to post when it comes to their access challenges, and if real and meaningful progress is to be made in the future.

16 Mind the gap

Making sense of access 17

THEFOG Market navigation and comprehensionFinancial products are often communicated and marketed in a way which makes them more difficult for consumers to search for and to understand.

THEVOID Physical and digital barriersConsumers can get ‘stuck’ or be ‘blocked’ from accessing financial products and services because of physical ability or capability issues.

THEMAZE Process, requirements and eligibility

Complex and bureaucratic processes lead to a lack of transparency, or make it difficult for both staff and consumers to be clear what needs to happen in order to solve a problem. Certain consumer characteristics and circumstances can make obtaining a suitable product or service at an affordable price difficult or impossible.

18 Mind the gap

Summary of key problems experienced: 3 Jargon can be difficult to understand or can add further confusion

3 Products are difficult to compare as they use different terminology and concepts to describe features

3 Offers and introductory rates can mask the ‘true’ costs of products

3 Not easy to have ‘oversight’ of the whole market, with products from different providers more or less easy to find

Summary of key problems experienced: 3 Move to online can mean that consumers with poor digital literacy or limited internet access have increasingly limited choice

3 Customers with disabilities can struggle to access banking services that increasingly rely on technology or automated systems

3 Customers in rural areas may face long and/or costly journeys to visit branches

Summary of key problems experienced include: 3 Customers who have slightly unusual needs can challenge systems that are seemingly designed for ‘average customers’

3 Poor and inconsistent communication can leave customers ‘in the dark’ about what they are expected to do in order to overcome an access challenge or problem

3 Customers are unable to find tailored products for their needs at a price they can afford

3 Measures put in place to protect consumers from fraud can make access more difficult or impossible

Making sense of access 19

20 Mind the gap

5. ‘The Maze’ – Process, requirements and eligibility

Bureaucracy, rules and other measures – some of them designed to protect consumers – can add process complexity and pose additional barriers to access. Some consumers are simply not eligible for certain products, or eligible at a price they can afford

Across the various situations, products and firms we studied as part of this research, many consumers had encountered difficulty dealing with mandated procedures and reasoning, often experiencing ineffective support and guidance when trying to pick their way through the process. The research also revealed how the technical and bureaucratic requirements of certain products are clearly preventing people in par-ticular circumstances from obtaining products and services that meet their needs.

“They questioned about the source of the money for the deposit and it was a bit complicated, it came from a number of different inheritance pots from different grandparents. Ultimately we got turned down, and with no real explanation. It left us in a very difficult situation.” (Consumer, Poole)

5.1 Identification requirementsThe majority of misunderstandings and process complications came from Identification (ID) requirements. Importantly, these problems were experienced by a wide variety of different consumer types, in terms of financial literacy, vulnerability and background. Many of the challenges were wholly practical – distinct from any financial decisions around eligibility, and instead relating to unreasonable or even impossible demands, which prohibited customers from even being considered.

“It’s ridiculous that I can’t get a new account, just because I don’t have photo ID. I haven’t been abroad and I don’t plan on going, so why should I have to buy a passport?” (Consumer, Wales)

For many consumers, the seemingly illogical nature of these demands created genu-ine bafflement. Moreover, the need to then find a ‘way around’ obstacles whose pur-pose was unclear and which made no sense to them, demanded additional time and energy from a process which was often already quite stressful.

“We were just going round in circles a bit, because I really needed a UK bank account so that I could get set up to pay the deposit quickly on all of these flats that kept going so fast, but they wouldn’t let me have an account without post to the flat. But I haven’t got a flat yet! Eventually the university wrote a standard letter to one bank, and so we all just went there quick to get accounts.” (Consumer , London)

“They said I couldn’t have a bank account with them because my name was too long for their system.” (Consumer , London)

In some situations, consumers had found themselves unable to navigate the security measures required for online or telephone banking, on occasion being locked out of their accounts because procedures have been difficult to follow.

The Maze 21

“I have a poor memory related to Bell’s Palsy and I struggle to remember the answers to my security questions. If I hesitate too much or get an answer wrong or they hear someone trying to help me, the bank just hangs up on me.” (Consumer, Glasgow)

Others had felt embarrassed to make repeat requests for help or security informa-tion to be re-issued, perceiving themselves as a burden, an added cost to the service for others, or simply not ‘up-to-date’ enough to cope with the realities of modern banking. For some, the system was too difficult to manage without the help and sup-port of those around them.

“My mum just doesn’t understand how PIN numbers work. She tells the person in the shop what hers is, and so we were constantly having to request new ones from the bank. Now we get cash for her, and try to avoid the problem that way.” (Consumer, Leeds)

These problems came into particularly sharp focus for those in more unusual cir-cumstances – including both permanent and temporary living arrangements.

“I went into my bank to ask if I could get a proper bank account, because I wanted to get a mobile phone contract and they told me [in the shop] that I couldn’t do it without a proper bank account. But then the bank said I couldn’t get a proper bank account without proof of address. People don’t listen, especially if you’re living in a caravan and then how could you get proof of address? When you tell them you’re a traveller they look at you like you’re shit.” (Consumer, Brighton)

Whilst some of these individuals were in particularly difficult situations, such as ref-ugees fleeing conflict and looked-after children leaving the care system, others were simply coming to the UK to study, or to work.

Often those arriving from outside of the UK struggled to find acceptable proof of address without first moving into a rented property – yet they often encountered problems acquiring a property without a UK bank account. Others lived in proper-ties without being the named recipient of utility bills or without an accepted tenancy agreement.

“Almost every firm has an alternative list [of ID]. And so what we’d really like to see is people asked instead ‘How can we help you get the right ID?’ ” (Expert interviewee)

For many, however, the most confusing aspect of the processes around ID verifica-tion was the different and conflicting information given by various firms. Indeed, for the most part, consumers’ problems – and their ease of resolution – had less to do with their own characteristics and abilities, and more to do with the inconsistent at-titudes and responses of branch staff. Not only did consumers have experience of different staff at the same firm being more or less helpful, but they also received con-tradictory messages. Moreover, there was an awareness among consumers that some staff were happier than others to bend or ‘be creative’ with rules and regulations.

Conscious of these variations, one respondent trawled seven different branches of the same high street bank before he found someone willing to take a more detailed look at the ID he was able to provide.

“Nobody was willing to look or engage their brain. In the end it turned out to be OK. They gave me a really basic account that you could only withdraw limited cash from. I just needed someone to look at the problem and say ‘you know, this is probably something we can do something about’.” (Consumer, London)

Aside from the frustration and confusion that arises with inconsistencies in staff ap-proaches, the willingness of some more sympathetic staff to adapt to some consum-ers’ needs suggests an awareness and acceptance that existing procedures are not designed as flexibly, intuitively or intelligently as they should be – further supporting the claims of some of in our sample that certain identification requirements simply do not work for those in particular circumstances (both mainstream and niche).

22 Mind the gap

5.2 Procedural support and guidanceMany of the process-related problems we encountered were made worse by the in-effectiveness of related support and guidance, which customers often found to be unclear, unhelpful, contradictory or simply insufficient.

On some occasions, consumers were left dealing with the consequences of being giv-en outdated, contradictory or inaccurate information about how to solve a problem. Frontline staff were often unable to resolve queries, or did not possess the knowledge to signpost to other potential sources of support and information.

For example, respondents who had no passport or photo ID were offered no further advice or support. In the case of one respondent:

“[The customer service assistant] just said ’Well, I see your point. I’m not sure what the answer is, it’s a bit of a catch 22 isn’t it!’ which wasn’t very helpful.”  (Consumer, Manchester)

“We might see someone who’s homeless being told, ‘You must have a passport, go away and get one and that will cost you £80,’ and of course that person hasn’t got the proof to get a passport in the first place and they certainly haven’t got £80.”  (Expert interviewee)

Language barriers are also a problem for some consumers. Translation require-ments differ from firm to firm. Some will allow a friend or family member to trans-late, while others will only permit this if the friend/family member also holds an account with the firm. Others still will demand a certified translator. Where they are given some help, consumers are often signposted to other sources of support such as local charities or a Citizens Advice Bureau, which may or may not be able to provide them with the services they require.

“When I asked them if it was possible to get a translator to help open a bank account, they said we’d need to get a list of ‘approved translators’ from the library. The library said that they hadn’t provided this service for about 18 months and that we should try the council. The council provided the number of a company who supplied translators to businesses. The company said they could only be referred by the company directly, so back to the bank. And then they just said no.” (Ethnographic research, Bradford)

These challenges of complexity and confusion were further compounded by the number of potential sources of information available to consumers, many of which are contradictory. Many of those we interviewed were triangulating help and advice received from frontline staff with information gathered from online sources, alterna-tive providers and friends and family.

5.3 Exclusion due to ineligibilityAlongside those consumers who experienced exclusion due to process were those who had successfully negotiated the bureaucratic ‘maze’, only to find themselves un-able to find a product suited to their particular needs and circumstances.

In many of these cases – and particularly regarding insurance – this was related to long-term illness or medical conditions, with risk assessments often felt to unfairly reflect reality.

“We aren’t going on holiday this year because I just cannot get any travel insurance cover, and we just won’t go without. Everyone I called said that my arthritis is just too bad this year.” (Consumer, Watford)

Geographic location can also play a role in ‘pricing consumers’ out of the insurance market.

“Our insurance, if we had it and we don’t, would be expensive because it’s a bad area. People get burgled and cars get burnt out a lot. There’s no way we can afford to have contents or something like that.” (Consumer, Manchester)

The Maze 23

‘Thin’ credit files were also a problem for some of those in our sample – creating par-ticular difficulties when accompanied by ambiguity about what exactly the nature of the problem was, leaving customers uncertain as to how best to ‘fix’ their situation in future.

“I got refused and they led me to believe that I had bad credit. In reality, I probably had no credit history. I wish they had told me things like going on the electoral role or getting a phone contract would help.” (Consumer, Glasgow)

Affordability per se also plays a key role in excluding consumers from the financial services market. Even those with access to the widest available range of products (i.e. able to access both digital and physical offers) sometimes struggled to access func-tional bank accounts due to their low level of monthly incomings.

“I wanted a proper bank account, like one you can use the card for anytime and anywhere, and that lets you go into the red and stuff. But I couldn’t get a proper one because I don’t get £800 going in a month. It’s better than the Post Office but it’s not proper.” (Consumer, Bolton)

Allied to these affordability ‘gaps’ were issues around the perceived value of products. Some less affluent consumers were simply unable to see how insurance was relevant and valuable to them. Aside from motor and buildings insurance, other policies were often described as an outgoing that wasn’t completely necessary. Consumers strug-gled to see the value of such products to their everyday lives, and were cynical about their worth in relation to other commitments.

“I just look at our monthly outgoings and there isn’t much room for an extra £30 on contents insurance that I’m pretty sure in the majority of cases they’d find a reason not to pay out or it would take weeks on end to get sorted.” (Consumer, Epsom)

Importantly, these ‘ineligibility’ exclusions were not just limited to customers seeking to access new products; they also applied to those who had successfully obtained a product, only to discover that they were excluded from accessing specific product services or features – notably insurance claims.

“I wanted to reduce the premium slightly, to make monthly outgoings easier to manage. But they said I can’t change anything on my policy without being a new customer, and if I do that they won’t cover me for existing conditions. But I’ve been treated, with them covering it, in the past year. So I can’t have that or what’s the point of the policy?” (Consumer, St Albans)

The challenges posed by ‘in-product’ exclusions such as these are twofold. On the one hand, there is the technical issue itself to consider (i.e. the justification for deny-ing a person the product they seek, at a price they can afford); on the other, there are the cultural factors which give rise to consumers’ misunderstandings. In particular, we found that many in-product exclusions were caused by the difficulty customers experienced in accessing and/or understanding the full range of product T&Cs – and firms’ role in failing to clarify these – at the point of purchase. This phenome-non, which may be considered a symptom of the complexity and confusion which characterises the marketplace at large, is explored in greater detail in the next chap-ter (‘The Fog’).

5.4 Explanation of denial or rejection For many consumers who are unable to access the product or service they need at an affordable price, their difficulties are compounded by a lack of clear explanation as to why they have been denied. This is particularly true in relation to credit, insur-ance and current accounts. Beyond the short-term panic and confusion sometimes caused by such occurrences, this issue can also lead to self-limiting behaviours – for example, applying in future for higher-cost, lower eligibility products, or to damag-ing behaviours such as repeated applications for credit.

24 Mind the gap

“I just keep trying and trying and trying. Surely someone will give me a credit card eventually!” (Consumer, Birmingham)

Poor explanations, and a lack of consumer understanding as to the reasoning be-hind their rejection, ensures that behaviours are not changed for the better. In order to learn from a situation and be in a stronger position for an application in the future, consumers need to fully and precisely understand why they have been turned away.

Where consumers are unable to take out an insurance product, for example, there is often a lack of explanation as to the influence of prior, legitimate claims on such a decision. This can lead to consumers feeling powerless and excluded from the mar-ket, with no clear sense of how to improve their eligibility – or when the issues they face might cease to be a problem.

“So I’m asking for a quote after doing all the right things and looking at the best-rated contents provider, etc. And they’re just refusing to even provide a quote! Most people would have given up but I persevered and it was only after I complained they said they wouldn’t quote because I’d claimed three times in the past five years, on different policies.” (Consumer, Devon)

Similarly, it is important that consumers do not have their worries compounded by reference to indistinct or irrelevant issues. Vague mentions of ‘credit reference agencies’, for example, can push consumers towards higher cost options, or imply that credit is poor when consumers have in fact been turned down for other reasons.

“It said: ‘We consulted a credit reference agency’. I wasn’t asking for any credit, just a current account, and I know my credit is good! So I panicked. Why didn’t they want me?” (Consumer, London)

Some older consumers reported difficulties accessing mortgage products, possibly as a result of misinterpretation or inconsistent application of the rules regarding affordability checks. Often this led to confusion for the applicants, who did not per-haps see themselves as ‘too old’ for a new mortgage or mortgage product.

“They said they wouldn’t give me the mortgage, despite it being for only 25% of the property value and me having more than enough salary wise. It was because of my age, but it was a ridiculous decision. They should have been able to easily see that I could pay it back.” (Consumer, Watford)

Consumers are adept at post-rationalisation and easily jump to conclusions about their eligibility, some of which later prove to be detrimental. Signposting to alter-native providers, therefore, is an important opportunity to help to alleviate con-sumer reactions and concerns in the event that services or products are refused or unaffordable.

“The lady did actually say: ’Look, we can’t cover you but we know someone who probably can.’ She said she shouldn’t really tell me but I’m so glad she did, as they covered me and I can keep driving now.” (Consumer, Watford)

Where services are withdrawn after an initial acceptance – for those with convictions, for example – the combination of a lack of full explanation and a lack of suggested alternatives can leave consumers in particularly challenging circumstances.

“Just out of the blue I get this letter saying that’s it, you’re done. They’re terminating my banking with them because of information about me that is apparently in the public domain. Well I’ve been out of prison [ for a fraud conviction] for two years, so why not terminate it earlier? I disputed it as my case is being reviewed [by Criminal Case Review Commission] but they just said no. So what am I supposed to do now?” (Consumer, London)

In analysing these particular issues, the underlying challenge that emerged is that no one body – whether a firm or intermediary organisation – currently feels compelled to take responsibility for outlining to consumers why they have been turned down for products, and providing advice, if requested, on how consumers could make them-selves more eligible for products in the future.

The Maze 25

Addressing this issue, and ensuring roles and responsibilities are clearly outlined, may help to reduce self-limiting behaviours among consumers, and better help them to develop their own eligibility for mainstream products which could potentially serve their needs well.

“When you start getting turned down, it’s easy to just assume that everyone is going to turn you down. They [firms] don’t give the impression that someone else might be able to help – it’s kind of a firm ‘no’”. (Consumer, Birmingham)

5.5 Summary• There are often practical barriers to accessing financial products, in particular

relating to the provision of the required/requested ID documentation

• Staff often give consumers contradictory or limited information on their options, and messaging can change between firms, and even between branches

• Consumers can struggle to understand and use their products once they have purchased them

• A lack of explanation as to why someone has been denied a product – along with a lack of suggested alternatives – can lead to future self-limiting behaviours

• Issues relating to income, health and place of residence mean that, for some, there are simply no products available that meet their needs

26 Mind the gap

5.6 The Maze: Opportunities for change and improvement Firms

• How can firms be honest and upfront about exclusions and rejections, without compromising their rules and the regulation in question?

• How can firms/trade bodies monitor customers’ experiences of using their products and services? For example, the customer journey of trying to find suitable and/or affordable insurance products which even the most savvy of consumers struggle with?

• Firms need to better support their frontline staff to ensure all are comfortable and familiar with procedures, and information and advice is therefore consistent across branches and between members of staff. Who is best placed to encourage this?

• How can staff provide appropriate advice and support when consumers have been rejected, in order to help them improve their future chances of acceptance?

Consumers • In what ways can we better support consumers to make effective choices about

financial products and find products that suit their needs when even mainstream consumers, who have relatively good levels of financial capability, struggle?

• Is the guidance available to consumers accessible and appropriate to meet the wide range of individual needs?

• What can we reasonably expect consumers to understand around rejections?

Government / Regulator / Other• When regulation is imposed on the financial services industry, is there clarity

around what the expected industry response is, and a chance to review any difficulties and unexpected consequences?

• Both expected and unexpected consequences of even the best intentioned regulation must be regularly monitored and tracked.

• When it comes to ID, how can the regulator and government work together to create clarity about acceptable documentation and/or encourage firms to better serve those consumers without the most standard forms of ID?

• What is the role of the regulator and/or government when it comes to supporting firms to signpost consumers to alternative providers when they are unable to provide a product or service?

• What is the role of the regulator and government when the market does not seem to be providing consumers with suitable products at an affordable price, even after comprehensive searches by many consumers?

The Maze 27

Fedyenka is a businessman (half French, half Russian), looking to relocate his technology start-up to the UK from Paris. When he arrived, he made it a priority to look up banks with the best business services, aiming to open both a personal account and a business account. He made appointments at 7 different banks, aiming to identify the ones with the best customer service. Out of the 2 who managed to keep their scheduled appointment time, neither were able to help or offer any guidance about how Fedyenka could open an account with the range of ID documents he currently had, despite the fact that he had assets in French accounts. In the end he went from branch to branch until he found a bank employee who had experienced a situation like his before, and was a bit more solution focussed. The whole process wasted a lot of time and effort - leaving him feeling that the UK was not ‘open for business’.

London

Age:27 Occupation:Entrepreneur Living situation:Livingalone

Product area:Retailbanking(personalandSME)

Journey stage:Application

Fedyenka’s story Facts about Fedyenka

THE MAZE

Fedyenka:Poor customer service and inconsistent information about ID requirements when setting up a bank account.

THEMAZE

THEVOID THEFOG

Ididn’tneedthemtojusttellmewhatwasthere,I need them to problem-solve,tohelpmeworkoutwhatwaspossible

28 Mind the gap

“Idon’ttrustthatthepolicywillactuallycovermeforwhatIwillneed.Iunderstanditwon’tcovermycondition,butthey have given themselves a very convenient get-out clauseanddidn’texplainittomeupfront.”

Alan suffers from a congenital heart problem, which was treated when he was a child many years ago. He recently purchased a critical illness policy, as “the sensible thing to do” now he is in his 50s and still the main income earner in the household. Alan did not expect to be covered for his illness but upon receipt of his policy and a read-through of the T&Cs he was disappointed to see he was also not covered for “any associated conditions”. This was not explained to him when taking out the policy and it was not clear what these associated conditions were, which left him feeling that the policy was virtually worthless.

Unexpectedly excluded from claiming on many aspects of a policy due to an existing healthcare condition

Ala

n

Leed

sIn

sura

nce

| U

sage

“I couldn’t believe it!Theywouldn’tgiveusthemortgageandIwassoconfidentwecouldpayitback,andIdidn’tfeellikeweposedarisk.Peoplelikeusdon’tnormallygetturneddownforthings.”

Simon and his wife are becoming unable to manage the upkeep of their large family home. Their children have moved out, and Simon’s wife struggles with arthritis. They decided to downsize to a more manageable flat, close to their family and with security to reassure them in their old age. Simon made an appointment at his local bank branch to enquire about taking out a mortgage for around 25% of the property value. He was asked to bring in records of his income, which primarily comes from his property business. After a protracted process of proving his income and submitting accounts, Simon was eventually refused a mortgage on the basis of his age and ‘unreliable’ work status.

Turned down for a mortgage because of age

Sim

on

Wat

ford

Mor

tgag

es |

App

licat

ion

“We were in a panic,thesellerwantedtomovequicklyandweweregoingtolosethisplace.Weaskedthebanktospeakdirectlytooursolicitorwhocouldworkoutwhatdocumentswereneededtoprovewherethemoneycamefrombuttheyrefusedandwithdrewtheoffer.”

Last year, Kate (and occupational therapist) and her husband (a teacher) found the perfect home. They had been searching for months because Kate has a disability and they needed to find a bungalow close to their family. Kate had recently inherited twice and her husband had also had an inheritance to use as a deposit on their new property. They had an Agreement in Principle for a 20% LTV mortgage when they placed their offer, however a few weeks later the mortgage was withdrawn due to money laundering regulation as the firm felt they could not prove where their inheritance money come from. Kate and her husband were at risk from losing their new home and the process of applying to a different firm would take too long. Eventually, Kate’s parents offered to lend her the money instead.

Turned down for a mortgage because of difficulty proving the source of inheritance

Kat

e B

our

nem

out

hM

ortg

ages

| A

pplic

atio

n

“It was a mess.Differentbranchesofthesamebankweretellingusdifferentthings.Intheend,Ihadtoasktospeaktoamanageranddemandtheydidsomethingforus.”

Josh and his wife came to the UK at the start of 2015 when his wife’s employer transferred her to their London office. When they arrived, they brought around £4000 in cash with them to live on whilst they were setting up bank accounts and waiting for their first pay cheques. Josh and his wife hid their money in among their clothes to keep it safe. When Josh and his wife tried to open an account they were turned down due to lack of proof of address because they were staying in a temporary rental apartment. Different branches of the firm that they were dealing with gave them different information about how to obtain proof of address and what was acceptable. Several weeks later, the firm finally let Josh’s wife open an account using her employment contract as a form of ID, during this time they lived on the cash they had hidden. It took a further 6 months for them to allow them to open a joint account and for Josh to get a debit card of his own.

Inconsistent information and long delays in setting up a UK bank account

Josh

G

uild

ford

Cred

it &

Reta

il Ban

king

| Us

age

Fiona made three legitimate claims on 2 different buildings & contents policies over a 3 year period. Once looking to renew, she discovered that the vast majority of providers would not provide her with a quote due to her claim history. Fiona is now unable to switch providers or negotiate a cheaper premium for her buildings & contents cover, and has been discouraged from making any further claims (even if legitimate) as she is unsure how they will affect her in the future.

Limited options for buildings & contents cover due to previous claims

Fio

na

Exe

ter

Insu

ranc

e |

Usag

e

“Whatisthepointofhavinginsuranceifyoucan’tuseittoclaimon?I did everything rightfromaresearchpointofview,Ifoundthetoprecommendedinsurers,buttheywouldn’tevenprovideaquote.”

The Maze 29

30 Mind the gap

For many consumers, each with varying degrees of education and confidence, the financial services market is complicated. For some this involves confusion about the amount of products available, how best to search for them, and understanding the differences between them. For others, there are questions around the differences be-tween product categories. The advent of internet search engines and comparison websites has brought the consumer face-to-face with the most diverse range of prod-ucts ever available, and consumers can often feel overwhelmed by the sheer number of potential options. What is more, despite a seeming plethora of options, some con-sumers can struggle to identify products which aren’t aimed at the ‘ideal consumer’.

6.1 Accessing and comparing product details Consumers often feel that it is simply impossible to understand the ‘whole market’, and therefore to conduct an exhaustive search of it. Many are perplexed by the va-riety of providers, before they have even begun to think about the detail of different product categories and the features of each individual product within such a cate-gory. A standard consumer response has become to say “I understand a little” or

“as much as I need to”, demonstrating the kind of ‘fog’ that envelops much of the market, leading to a lack of confidence when it comes to making effective choices.

“I mean, I think I’m ok but I wouldn’t say I’m particularly good at financial stuff or understand everything. Definitely not. There’s so much out there I don’t think anyone really gets all of it.” (Consumer, Birmingham)

Once consumers move from looking at the market in its entirety, they are further confused and intimidated by the features of specific products. Whilst many are con-fident understanding the basic features, there remains a fear of hidden costs and limitations that are not clearly explained. The ability to compare products when as-sessing upfront features often disguises consumers’ inability to compare across a full range of features, and thus conduct a thorough and comprehensive search of the market. For these reasons, it is not always easy to work out what constitutes value for money in a particular context, or for a particular product. Even when using price comparison sites to compare different products and their individual features, many consumers still feel that they are not getting to the bottom of what a product entails.

A particular pain point for consumers centres on the ‘cost’ of products and whether or not they offer ‘good value for money’. Many stated that their strategy for choos-ing a product was simply to go for the option that “seemed to fit their needs”, “was middle of the market” (i.e. not too expensive, not too cheap), and was provided by

“someone they had heard of ”. Whilst exciting, new and enticing product features are shown on adverts, comparison sites and discussed by family and friends, the ‘small

The way financial products are communicated and marketed can make it difficult for consumers to understand and identify the right products for them

6. ‘The Fog’ – Market navigation and comprehension

The Fog 31

print’ of fees and charges was felt to make accurate comparison very difficult, even for those who were willing to put in the effort. The relative difficulty of finding out this sort of information only serves to make consumers more wary and/or confused by the product and less able to compare across similar products.

“They always have all the good stuff there in big type and it’s all shouty shouty. But the bits you really need to see, like how much they’ll charge you to be in your overdraft, you can never find that bit!” (Consumer, Birmingham)

“The issue of course is that marketing is trying to get us to buy, so it’s highlighting all of the benefits, but people need to know the risks too.” (Expert Interviewee)

“There isn’t clear information about how much products are going to cost or how they’re going to work. When you’re taking out the account, anticipating problems isn’t built in to [the process] so something that’s supposed to help you manage your money undermines your ability to do that.” (Expert interviewee)

What is more, price comparison sites do not always show or highlight the more niche providers of certain products, and consumers may therefore not be able to use them in order to conduct a comprehensive search of the whole market for the most appro-priate product. Many consumers are not willing or able to pursue a lengthy process of methodical searching across all providers, particularly if they are likely to face multiple rejections along the way.

“[There is a lot of] energ y required to try and find insurance for people affected by cancer. You can’t just go through a price comparison website; often it’s individually calling individual firms. After 1, 2, 3, 4 rejections, you can understand that people might think that no-one’s going to offer [them] cover, [they’ll] just give up now, it’s [become] too tiring.” (Expert interviewee)

6.2 Jargon and technical complexityAcross the research the majority of consumers told us that they struggle to under-stand and interpret T&C documents across a variety of financial products. T&Cs were universally described as difficult to read, jargon-heavy and full of vague lan-guage whose practical implications were unclear. Many said they had tried and failed to engage with documentation in the past, and now resort to simply filing the T&Cs ‘just in case’.

“You try and read them and it’s all legalese. Jargon this and jargon that, and all these vague sentences where you end up thinking: wait, so could I claim or not?” (Consumer, Leeds)

There was no distinction across products, although the more complicated a product the longer and more impenetrable the T&Cs were expected to be. Credit and in-surance products were expected to have more fees, exclusions and information than simpler products, such as current accounts.

Some customers had heard of initiatives around plain English, and were apprecia-tive of efforts in this area. Others told us of the need for more work to make jargon accessible – suggesting that, where plain English is not easy to apply, an easy-to-use

‘jargon buster’ would be helpful. Many were keen to see a summary of the key parts of their T&C documentation, perhaps along the lines of the ‘Key Facts’ document provided when a mortgage is accepted.

“I have seen those Key Facts documents you get with a mortgage and I think they’re really good. Not too long, but giving you an overview of what the most important things to know are.” (Consumer, Birmingham)

6.3 Compounding exclusion and ineligibilityAn important aspect of ‘The Fog’ (i.e. consumers’ difficulties in accessing and/or comprehending product features) is how it further complicates the negative

32 Mind the gap

experiences of those who are ineligible to receive certain products (see ‘Exclusion due to ineligibility’ in the preceding chapter, ‘The Maze’).

In particular, just as the congestion and complexity of the market can leave some consumers failing to find a suitable product for them even though such a product may exist, so the ‘fogginess’ and poor signposting of the landscape can cause others, who may simply not be eligible for any product, to continue searching for detrimen-tal periods of time. After an exhaustive search which can take up a lot of consumers’ time and energy, the realisation that there is no appropriate product exists can be a difficult one – compounding the disappointment of not being able to access the re-quired product. In some cases, sub-par alternatives may be used, but in others con-sumers will simply go without.

“I tried lots of travel insurance companies who claim to specialise in providing cover for people with pre-existing medical conditions and I tried a dozen others recommended on the Macmillan website. Even though I told the companies that my life expectancy was two to five years, apart from one they all asked if I expected to be alive six months after returning from my holiday, I found this quite distressing and unnecessary. Some said they wouldn’t quote for terminal illnesses and could direct me to someone who would, one said they would call me back and never did. So I ended up going with the only insurer that would cover me at a cost of £1,300 for a 10 day cruise in Europe.” (Consumer, Surrey)13

“It’s not simply the case that disabled people aren’t searching hard enough to find products, it’s often that products are simply too expensive for this group, or in many instances just not there.” (Expert interviewee)

As discussed in ‘The Maze’, the fogginess of the marketplace also plays a role in the exclusion experienced by those who have obtained existing products, but who find themselves surprised by their ineligibility to access certain services or features later on in their product journeys. Invariably, we discovered this exclusion to be the result of the detail of T&Cs (e.g. insurance claim exclusions) not having been clearly ex-plained at the point of purchase. Additional examples of this phenomenon can be found in the industry-specific sections below.

6.4 Product-specific ‘fog’Current accounts & everyday bankingDespite being encouraged to switch, and often having noticed eye-catching rewards for doing so, consumers find it difficult to clearly see how well their current account serves them, and what a switch might realistically mean. It is, for example, difficult to know exactly how much you have paid in fees, or earnt in interest, without going through your full account history. In some of the cases we studied this had resulted in consumers staying put, preferring the ‘devil they know’ to a new provider, account and experience – or alternatively seeking informal options which exist outside of the traditional confines of the industry (e.g. community savings schemes).

Developments in financial technology, such as the Midata initiative, have the poten-tial to help consumers cut through the advertising of current accounts and assess which account would be best for their individual needs. However, there was limited awareness of Midata among our sample, and there remain challenges with both it and similar digital developments – both in terms of availability, ease of use and ac-cessibility to those who are less computer literate. Midata, for example, requires cus-tomers to download and upload a .csv file from their online banking account, after which they need to be able to understand the assumptions made within the compar-ison algorithm (e.g. regarding average monthly balances).

The use of different terms and language by firms can compound consumer confu-sion and lead to further scepticism. In practical terms, it becomes yet another barrier that prevents consumers being able to compare across products, making it unclear

13 For a later European holiday, this same respondent’s relatives struggled to gain travel insurance simply because they were travelling with her and she had cancer.

The Fog 33

whether different products offer similar features, benefits or charges.

“You don’t know if one place saying one thing is the same as the next. I don’t really know what I’m supposed to be doing but I just figure that a bank account is a bank account and so I’ll stick with the one I’ve got.” (Consumer, Birmingham)

There seems to be a presumption on the part of firms that consumers do, and if not then they should, understand technical language around common financial prod-ucts. Particular examples included APR, AER, ‘disclosure’ and ‘credit check’. Whilst consumers may have a simplistic understanding, or be able to ’take a punt’, they of-ten lack the clear understanding that is necessary to process firm’s communications.

“What does APR actually mean? I know that a lower figure is better, like I know what to look for, but what does it actually mean?” (Consumer, Birmingham)

Furthermore, it can be difficult for consumers to ask the questions they need to. In some circumstances customers are embarrassed to ask about common terms and phrases, which they presume they are expected to know and understand. Some high-lighted that this was because they are intimidated by the banking environment and see the customer service agents as holding all the required knowledge and power. Many are unclear on the difference between ‘sales’ and ‘advice’ and expect those working for financial services firms to try and sell them the product that is in the firm’s (or individual staff member’s) best interest. When advice is given, consumers don’t always have the confidence that what is being sold has fully taken into account their needs. This leads to a power imbalance and a likelihood that consumers feel disempowered and lacking the tools to be certain in their choices.

In other situations consumers are simply unable to ask, and may resort to asking others with equally limited knowledge, or using internet search engines where infor-mation is not necessarily correct and unbiased.

“I went with my daughter to open her first bank account. They said, ’Oh we need you to accept the terms and conditions if we’re going to proceed today, so we’ll just tick that you did, okay?’ I was so surprised. I mean I know nobody reads them but to have the bank say that was something else.” (Consumer, Devon)

Certain groups of consumers have the perception that they are ‘bad customers’ or an ‘unattractive customer’ who wouldn’t be eligible for mainstream products on the market. In some cases this limits behaviour to such an extent that consumers ‘self-ex-clude’ from the mainstream market. Despite seeing a large amount of products in the wider market, these consumers may feel that there is a lack of range in what is on offer, with fewer, or no, products designed to meet the needs of those who don’t fit the ‘ideal customer mould’.

“It’s like, if you don’t have at least £800 cash coming in a month there are only the rubbish accounts for you. Because they don’t want you to be a customer.” (Consumer, Bolton)

Furthermore, applications for products that are rejected can be demoralising and exacerbate self-limiting behaviours. Consumers find it traumatic to be constantly rejected, and quickly internalise perceived messages about where their business is more or less appreciated.

“Something our advisors often comment on is how it feels for people when they are turned down by their bank or asked questions they can’t answer, or they’re made to feel that it’s their fault that the service isn’t right for them. And we get many reports of people who are unwilling or reluctant to use financial services again because of a bad experience or because they feel that those services aren’t for the likes of them.” (Expert interviewee)

Credit & borrowing Consumers seeking credit products face a similar range of challenges in terms of comparison and understanding. Whilst many are shopping around and trying to find the most suitable product for their needs, terminology and hidden fees can be

34 Mind the gap

daunting and confusing. Once again, some consumers can struggle to find the most appropriate products for them, despite conducting extensive searches.

“What we would encourage is innovation around credit products at the design phase. Instead of trying to make everyone fit the current products on offer, we need to understand that there isn’t a ‘one size fits all’ credit product; different people need different products.” (Industry Interviewee)

Further compounding the issues around access to appropriate credit are the many myths surrounding it, principally focussed on the best way to get a good credit score, which fuel self-limiting behaviour on the part of consumers. Many are influenced by the credit habits of those around them, or by the physical options available to them in their town or local high street.

“Credit scoring is a bit of a myth. We’d like to see a lot more information and training to staff to know what they can tell somehow about how they can go away and improve their credit score because very often people’s circumstances would enable them to access credit but their score stops them.” (Expert interviewee)

Certain consumers are so scared of rejection that they do not even apply for main-stream credit products, preferring instead to stick with those for “people like them”, which may result in higher charges and a negative reflection on a credit report. A need to be sure of success can therefore push consumers towards more ‘open door’ products, which they are confident of securing, but which don’t often meet their needs particularly well.

Additional difficulties arise due to poor explanations as to why consumers have been turned down for particular products, which can encourage self-limiting behaviour when it comes to future purchases. Poor signposting to alternative products and/or providers can serve to push consumers ever further away from mainstream options.

“I went to the bank and asked for an overdraft and they said no because I had poor credit. I didn’t get why I had poor credit and they didn’t give me a reason. I was living with my parents at the time and working for my dad and I didn’t have any debts or anything. A few weeks later, I got a letter from a company saying that they could give me a credit card and help me build my credit score so I took a card with them even though the interest was really high.” (Consumer, Glasgow)

Where recommendations are given, they can be insufficient and inappropriate. In some specific circumstances consumers told us that they were directed towards pay-day loans when told they would most probably be ineligible for a loan at their cur-rent bank. In such circumstances consumers were left confused by mixed messages about payday loans, and less likely to seek out a mainstream credit product in future.

“They say, normally people like you get payday loans. Well I don’t want to get a payday loan do I because I know they’re bad for you. So now I’ve got nothing. The bank doesn’t want people who look like me.” (Consumer, Bolton)

Furthermore, consumers are encouraged across the board to ‘shop around’ and find the best deal. In contrast to current accounts, however, those shopping around for credit receive mixed messages about the benefits of doing so. Whereas on the one hand shopping around is universally considered a good consumer habit, many are also aware of the negative impact of multiple applications (and rejections) on a credit report. These mixed messages can lead to further inertia and concerns that shopping around (and making multiple applications) might not necessarily be in the customer’s best interest.

“I know that you’re not supposed to apply for many credit cards or that looks bad. So I always try and wait a while before I do the next one if I get turned down, as I often try and get good deals and balance transfers, that sort of thing. Normally I try to wait about six months but sometimes it’s really difficult.” (Consumer, Birmingham)

Throughout our research we encountered very few consumers who had a good un-derstanding of how credit referencing works, or felt comfortable explaining it to us.

The Fog 35

“What is your credit score? Will you tell me? Is it like they look at your records with them and then ask the police about your criminal record?” (Consumer, Manchester)

“So you know I found out this thing from my mate who wanted a phone contract. The guy at the shop said he was turned down but he should put himself on the electoral roll and in a bit he might get one. So I put myself on the electoral roll too!” (Consumer, Bolton)

With certain credit products consumers are often not offered the most suitable prod-uct for their specific needs, and are rather encouraged to take the most profitable or

‘exciting’ option. This is often the case with added extras for current accounts, and packaged accounts, along with cashback credit cards. Consumers can often be over-whelmed by jargon, tempted by seemingly enticing offers, or ‘reassured’ by poorly substantiated claims, without fully working through the details of a product.

“I am really struggling to make my mortgage payments at the moment. There’s a lot going on and my kids and I are moving into rented accommodation which I’m paying for too…. My bank account costs me just over £20 a month, which seems expensive to me but they say it’s their best one in the bank.” (Consumer, Birmingham)

As people’s circumstances change, so will their financial needs, meaning their chosen products may no longer be fit for purpose, and reassessment is required to ensure they remain affordable and/or suitable. Firms, however, do not currently assess cus-tomer needs on an ongoing basis, and although consumers may not always welcome such reviews, they would nonetheless provide a ‘safety check’ for those whose chang-ing financial situation complicates their access to credit products

In situations where regulation has attempted to address the need for products to be as suitable as possible, consumers can still find themselves confused, perhaps even more so by convoluted affordability checks that aren’t fully explained by firm staff. Furthermore, affordability and risk assessment questions do not always accurately reflect consumer behaviour, and it is easy for firms to make assumptions about con-sumer priorities that might not be accurate. Alternatively, it can also be relatively easy for consumers to circumnavigate such checks, perhaps by using cash for trans-actions they think will make them look less than suitable.

“When we were looking for our mortgage we knew it would be a stretch so we just took out cash for little luxuries they might ask about, and my husband stopped gambling online just for the months they wanted statements for.” (Consumer, Brighton)

Insurance As with current accounts and credit, those we met who had sought insurance prod-ucts were readily drawn to the more easily comparable features, but once again confused when it came to a more detailed comparison of the various exclusions and charges.

We found a particularly low level of comprehension amongst those who had taken out insurance policies as part of a packaged current account. As questions often fo-cus on the range and quantity of ‘added extras’ when consumers are taking out such an account, there may not have been an in-depth discussion of the cover offered. Consumers can therefore find themselves without a clear idea of their eligibility to claim on this cover, and can sometimes struggle to ask questions about it, either due to the lack of knowledge of firm staff in branch or a set of completely impenetrable T&Cs.

“I knew they wouldn’t cover my condition [Chron’s] but when I’d taken out the [critical illness] policy I had a read through it and it said they wouldn’t cover my Chron’s and any other associated conditions. But what are those conditions? They could say anything is associated, so it’s a completely pointless policy as far as I’m concerned.” (Consumer, Watford)

“I thought I was covered because I pay for my account and it comes with travel insurance. Anyway, a few weeks before we went away, I called them just to check and

36 Mind the gap

said ‘I have lupus but it is in remission’, and they said that I would have to pay extra. It ended up being £300 extra, even though I had been paying for it every month for about 15 years.” (Consumer, St Albans)

6.5 Summary• Consumers can struggle to understand technical language used to describe

financial products and services

• There are also difficulties experienced by many when it comes to understanding not only the benefits of products, but their costs and exclusions too

• There are many myths around credit scoring that can impede access to mainstream credit, or consumers’ ability to improve their scores

• Consumers struggle to search for the most appropriate product, despite the advent of price comparison websites

• Those who are ineligible for products can have their difficulties compounded by the length of time it takes to establish their ineligibility

6.6 The Fog: Opportunities for change and improvement Firms

• How can firms ensure that financial products are communicated and marketed in a way that makes them accessible to consumers, using plain English and making T&Cs as accessible as possible

• How can firms make time to ensure customers are purchasing products which are suitable to their needs and circumstances?

• How can firms better facilitate effective consumer searches, so that consumers are accessing those products which best meet their needs?

• How can firms provide products which work for them commercially and also plug those gaps in the market where consumers struggle to access any products?

Consumers • What can consumers reasonably be expected to understand when it comes to

financial products and services?

• How can we better support consumers to make effective choices about financial products?

• Is the guidance available to consumers accessible and appropriate to meet the wide range of individual needs

Government / Regulator / Other• Do we have unrealistic expectations of consumers when even people with good

financial literacy struggle – are we expecting them to conduct searches of the market beyond their means and abilities?

• Can we provide better frameworks to help consumers compare products and understand what is best for them?

• How can we best support innovation to ensure that comparison and switching is made easier across the full range of financial products?

• What is the best way to ensure firms are using standardised language and less jargon, in order to aid comprehension on the part of consumers?

• How can we clarify responsibility around sign-posting, so that consumers are able to conduct the widest possible searches of the market, and aren’t missing out on products that meet their needs simply because they are unaware of their existence?

• Who should consumers (and their representatives) turn to when they simply cannot find a product which meets their needs, and who should take responsibility for such gaps in the market?

The Fog 37

Alison was diagnosed with terminal cancer in 2014 and had orthopaedic surgery to remove tumours including a hip replacement. She has been given 2-5 years to live but currently takes medication that means she is in good daily health. Alison tried to find travel insurance to enable her to go on holiday with friends and family, after her recovery, and her consultant was very happy to write her a letter to say she was fit for travel. She tried multiple insurers to get cover for 10 day cruise, ended up costing as much as the cruise itself. On another trip, the problem seemed to extend to family members travelling in the same party, as Alison was down as the ‘organiser’ and this meant that they couldn’t secure their own insurance, independent of Alison’s.

Alison also sought help and advice from various sources, including the BIBA helpline. At no point was Alison signposted to better deals which might have helped her.

Surrey

Age:70s Occupation:Retired Living situation:Livingalone

Product area:Insurance

Journey stage:Usage

Alison’s story Facts about Alison

THE FOG

Alison:Unable to find any travel insurance

THEFOG

THEVOID THEMAZE

Mydaytodayhealthisroughlythesameasanyother70yearoldwithahipreplacement.Iknowpeopleondialysiswhowhereofferedcheaperinsurancebecausetheirconditionswere‘lifelimiting’ratherthanterminal.I have looked and looked and nobody is willing to cover me

38 Mind the gap

“Ididn’tthinkofgoingtothebankwhenIwasshort…Idon’tthinkthey’dbeabletohelpmeout.The bank has tried to humiliate meinthepast.”

After a few bad experiences interacting with bank staff, Bobby has developed a strong sense that he’s ‘not the kind of customer’ mainstream banks want - including needing to secure a personal reference to open a basic bank account, which he found frustrating and humiliating. Bobby lives in Glasgow where he has steady work. He has no debts and has met all his repayments on car finance in the past. When Bobby needed money recently he went to a payday loan provider, as he felt they would be more welcoming of someone like him. He didn’t really shop around, as he felt that the person he dealt with was ‘nice’ and understanding - and that was more than he would get in branch.

Has been put off shopping around, as he doesn’t feel like he’s the kind of customer mainstream banks want

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“Theyjustkeepaskingme‘whatcanIaffordeachmonth’,butIhavemoneyandit’snotaboutthemonthlyrepayment.IknowthereareotherfactorsIneedtotakeintoaccount,butthere are so many things to consider, I can’t keep them all in mindatonce.”

Amy wants to buy a new car, but has been putting it off because she can’t understand the relative merits of different forms of car finance. Every time she speaks to someone about it, she feels that they are strongly advocating their own product - without really helping her to understand how it differs from other options on the market. She finds that the different providers are fixated on the monthly repayment and they only want to compare products on this amount - but from doing her own research, she knows that the monthly repayment is affected by a lot of other factors such as interest rate and whether or not she will be able to keep the car once the deal ends. She is worried that by not working through the detail now she could end up worse off in the future.

Struggling to compare different car finance deals

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“I think I’m stuckbasically…IcanstickwiththesameproviderorIcangowithoutbuildingsinsuranceorspendtherestofmylifetryingtofindadealthatmightnotexist.”

Jon bought his house around 15 years ago and after a year or so spotted some early signs of subsidence that hadn’t been picked up on the survey. He made a claim on his building insurance, which paid out for corrective work and there have been no further problems since. Whilst Jon has always been happy with his current provider, he feels it’s time to shop around and see if he can get a better deal. He’s financially savvy, so has gone to price comparison sites and even to specialist brokers. However, each time he’s turned down on the basis of the old (and now rectified) subsistence problem. He feels that his past claim has effectively ‘blacklisted’ him from the building’s insurance market, and he has no choice but to stick with his current provider.

Has tried to find a provider that will cover his house, but year after year of calling various different providers he has given up

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“It’s a lose:lose situation.Iwaswillingtopaymore,buttheywouldn’tevenhaveaconversationwithme...intheendIjusthadtogowithoutappropriatecover.”

Toby recently went on the trip of a lifetime adventure, which included doing a number of ‘bucket list’ extreme sport activities. He knew there were risks involved and didn’t expect to be covered under a normal travel insurance policy. Having reviewed the detail of a whole range of policies, he still felt that there might be parts of what he was planning to do that he wouldn’t be covered for and wanted to have a conversation with someone about whether it was possible to make more of a bespoke package. Despite several attempts, he struggled to get anyone to have a proper conversation with him, with most people he spoke to on the phone seemingly not interested in exploring his needs at all. In the end, he just gave up and went uninsured - he wasn’t happy with the outcome, and felt that it was a ‘lose:lose’ situation for all involved.

Couldn’t find a provider willing to discuss his insurance needs - willing to pay more for the right cover

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“Idon’tknowwhatmycreditscoreis.Orwhereitisforthatmatter!How would I find out? Whotellsyou?”

Aoife accumulated a substantial amount of credit card debt during her separation from her ex-husband, and is now struggling to pay off her debts with her income. Aoife has never checked her credit score, and is unsure as to how her current situation might affect her in the future, such as when she needs to remortgage alone.

Little understanding of credit scoring

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The Fog 39

40 Mind the gap

Branch closures and increasingly automated processes are preventing some consumers from engaging with the marketplace

7. ‘The Void’ – Physical and digital barriers

In the course of the research we encountered numerous consumers who had in ef-fect been excluded from the market by some kind of practical barrier to engagement. In some cases, this involved difficulties accessing their current banking and financial products, or gaining access to effective, suitable choice and so operating within a limited or restricted set of products. These problems can be broadly grouped into physical and digital access issues.

7.1 Physical barriersThose experiencing physical access issues tended to be living in rural areas, have poor access to transport, or have some kind of disability. Often those we met who were struggling with travel were older, but not exclusively so – and often they had not chosen to live in such a rural location, but were instead social housing tenants who had been given limited choice about where they could live. These individuals regularly reported that public transport was expensive, infrequent and unreliable, and often resorted to using alternatives such as taxis which were significantly more expensive. This problem was particularly profound for those who didn’t have family, or whose family did not live nearby.

“We can’t drive to get to the nearest branch so we have to take the bus, for about an hour. But there’s a lady in the village before ours who gets the bus too and she is in a wheelchair so she takes up the disabled space. Then we have to get a taxi which is £16 each way.” (Elderly couple, Somerset)

We observed many older or disabled consumers who were entirely dependent on others for day-to-day banking as a direct consequence of their disability. In the ma-jority of cases, younger family members were lending a hand or guiding their rela-tives through the intricacies of modern banking. In some circumstances formal ar-rangements were in place, such as power of attorney or third party mandates, but on many occasions we found families ‘making do’ with informal arrangements and help.

7.2 Digital barriersWhile business models are based increasingly on a digital delivery strategy, we found a certain segment of consumers who could not, or would not, embrace online op-tions or shift their behaviour.

“I don’t go online – never have done, never will.” (Consumer, Newcastle)

For such consumers, digital exclusion operates on a variety of levels. They do not have the ability and confidence to undertake simple banking activities online, or even to search for products and information.

The Void 41

“One of the main practical issues that disabled people face when accessing financial products is around digital exclusion. Businesses need to look at how accessible their websites are as well as looking at their customer service provision.” (Expert interviewee)

Secondly, they may lack the financial resources to purchase the necessary equipment, such as a tablet or computer, and/or they may struggle with the cost of internet connection. Finally, in many rural areas broadband and mobile signal remains weak, and lags behind much of the provision for urban centres.

Digitally excluded customers felt that they were often paying a premium for those products they do take out, missing out on cheaper products sold exclusively online, or alternative non high-street providers who may offer cheaper and more suitable products for their needs.

“My son told me that I could get a better deal online, but I just find the idea of not being able to pop in to talk to someone so stressful that I couldn’t go for it.” (Consumer, Yeovil)

“We think the industry could do better, and that it could be more helpful in steering older customers towards the best rate accounts available.” (Expert interviewee)

Whilst initiatives like the Barclays Digital Eagles project were mentioned by a small minority of consumers as an example of good practice, there is a long way to go before the scheme can reach the numbers of people required to reduce digital ex-clusion. Furthermore, much of the digital exclusion we encountered in this research resulted more from a lack of trust in more automated processes, than any lack of ability and skills. For example, we met a lot of digitally competent and confident consumers who were able, but unwilling, to do their everyday banking online. Whilst they may use the internet to search for deals and compare products, they were un-comfortable with the idea of having access to their accounts online. For the most part, this was due to security concerns and worries about their own ability to detect fraudulent activity and trustworthy transactions and sites. Many had read ‘horror stories’ in the media about hacking scandals, and were simply not comfortable with exposing themselves to the world of online banking.

“I’ve read about it in the paper. They say look for that padlock to know it’s secure but I’ve read that hackers can fake that too.” (Consumer, Watford)

Others were worried about identifying communications, such as phone calls and e-mail from firms, having heard stories of fraudulent messaging and phone calls. On a more practical level, some older consumers were concerned about their ability to remember various passwords and identification numbers, and the safety of storing them physically or digitally in case of forgetting.

This risk-averse attitude can also lead to an unwillingness to engage with new, or unknown, providers. Visiting a ‘bricks and mortar’ establishment was felt by some to be the only way that they could obtain the necessary reassurance about suppliers’ trustworthiness.

7.3 Reliance on othersIn order to overcome physical access issues, and digital and affordability exclusion, some of those we met were adapting financial products to their specific lifestyle needs. This included passing on details and passwords to family members, friends and carers, as well as restricting themselves to certain well-known products, and local branches. Others were resorting to wider acquaintances, such as hairdressers, taxi drivers and students, in order to carry out basic transactions such as entering a PIN, or withdrawing cash.

Some of these strategies put consumers and those helping them at additional risk. Informal arrangements had often not been fully thought through in terms of risk, as those involved see the situation purely as ‘helping out’.

42 Mind the gap

“I help my piano teacher because he just can’t see well enough to look at his accounts online.” (Consumer, Leeds)

Whilst in practical terms these arrangements often seemed to be working, both par-ties often described the unease that they felt – especially around making payments and withdrawing funds. The carers perceived themselves to be verging on possible criminality, while the looked-after person was either simply anxious about the pre-dicament in which they were placing their carer, or genuinely concerned by the amount of trust they were forced to place in another person.

“I rely on my daughter for everything. She takes me to the Post Office to get my pension, she looks at my bank account online for me and she pays all the bills for me. I wouldn’t be able to cope without her.” (Consumer, Northern Ireland)

We also encountered many individuals who faced language barriers which often act-ed as a severe impediment to accessing everyday financial services in branch and over the phone. Limited confidence in English and/or understanding of the UK finan-cial services market meant that some consumers opted for the simplest product avail-able to them, or were entirely reliant on the advice of others, who may themselves have limited understanding of the most appropriate products. Furthermore, such consumers are unlikely to change their banking and insurance products, as there is a great fear of the unknown in terms of understanding and a lack of knowledge as to whether other providers offer similar products and services (e.g. translation).

“A neighbour told me to get a payday loan when I was waiting for my benefits to come through and had no money. I thought they must know what they were talking about, so I went to the shop with some ID and they gave me a loan. The whole transaction was done in English and I didn’t really understand how much I would have to pay back. They just told me where to sign. In the end, my children had to help me pay off the debt because it was out of control.” (Consumer, Bradford)

Others were relying on friends and family for translation and interpretation, leaving themselves open to mixed and confused messages, and meaning they were entirely reliant on the interpreter’s understanding of the issues and products discussed.

The risks of potential coercion, manipulation and theft are not to be ignored in situ-ations such as these. Often the firm itself will be entirely unaware of the help being given by a relative or friend, and is therefore not in a position to offer alternative arrangements.

Furthermore, should the informal help situation change, perhaps as a result of someone moving away, those reliant on others can very quickly become particularly vulnerable.

“I do worry sometimes about what my Grandma would do if I wasn’t there. Nobody else seems to want to help her.” (Consumer, Leeds)

Within this layer, we often found that consumers were subject to numerous exclu-sions, perhaps living rurally with poor internet access, or with a disability and unable to operate a computer.

7.4 Summary• Practical exclusion of consumers from financial products and services is primarily

linked to physical access issues, or digital exclusion

• Older people, those with disabilities, and those living in rural areas, are most likely to struggle with physical access, due to branch closures and practical impediments

• The same groups are also more likely than others to experience digital exclusion, along with some low-income consumers

• A lack of access to the required technology, alongside a lack of confidence or computer literacy, can exclude some consumers from access to products and services

The Void 43

7.5 The Void: Opportunities for change and improvement Firms

• How can firms make their products as accessible as possible for existing customers?

• What alternatives are on offer for those who cannot make it into branch and are not able to find a way to use current options?

• Should firms be doing more to cater for existing customers that can no longer make it into branch?

• What can firms do to reduce the complexity in security arrangements and increase trust in remote banking provision (such as telephone)?

• How can firms improve arrangements for translation? And how can they ensure that these services are consistently available and known about by customer-facing staff?

Consumers • How can we better support customers to obtain appropriate legal protection to

ensure their carers and family members are able to act on their behalf ?

• What more can we do to help and encourage consumers to forward plan for their banking needs, ensuring they have the appropriate skills to manage effectively and independently?

• How can we support those who are caring for others to seek out and access help and guidance from firms when they need it?

• To what extent should we expect consumers to embrace digital channels?

Government / Regulator / Other • If some financial products are to be considered essential for full participation in

society, consideration must be given to the affordability of these products, with efforts made to ensure all are included, even those on the lowest incomes. Whose responsibility is it to ensure that necessary alternatives or measures to alleviate detriment are provided?

• How do we ensure that geographic isolation is appropriately dealt with, so that consumers living in rural areas are not excluded from accessing the fullest range of financial products and services?

• How do we encourage those working on future transport and housing planning to consider access and the needs of those with physical access issues?

• How do we ensure that the digital ingrastructure is inclusive and accessible to those who may benefit from it the most (e.g. those facing physical barriers)?

44 Mind the gap

The Void 45

Tim lives in retirement accommodation and uses a wheelchair which means he is often frightened to go out without his wife. He can use the local Post Office for small transactions, although it doesn’t deal with everything he needs and is only open one morning a week.

The nearest bank is about 20 miles away and he struggles to get the bus, as there is a lady in the next village who gets on at the stop before who also has a wheelchair, which means she takes up the only wheelchair space and the bus driver won’t let him on. There are currently only 2 buses a day. When Tim and his wife do go to town they need to get a taxi, which costs £16 each way. Recently they’ve been using a doorstep lender for the ease of accessing credit.

Yeovil

Age:70s Occupation:Retired Living situation:Livingwithwife

Product area:Retailbanking

Journey stage:Usage

Tim’s story Facts about Tim

THE VOID

Tim:Unable to physically access branch

THEVOID

THEFOG THEMAZE

It’salmostimpossiblewithoutspendingalotofmoneyontaxis.Door-steplendersarethebestoption

We just can’t get to the‘normal’ bank.

46 Mind the gap

“It’saninvisibleillnesswhichmeansthatIreallystrugglewiththings‘normal’peopledo.They don’t seem to be able to flex thesystemtobettersupportme.”

Liz has chronic fatigue which can mean when she does need to go in branch the wait to be seen can be exhausting (to the point where she can be bed bound for days afterwards). Online banking has been a real plus for Liz and she uses it frequently - although she has some worries about the quality of advice given by phone and does need to go into branch occassionally. When she is there, she finds little support is available to help her deal with the situation (for example, queuing for long periods of time are her worst nightmare and not keeping appointments meaning she has to wait around for a long time). She tries to put this off as much as possible, but as she needs more and more complicated financial products (like mortgages) she is finding this to be a considerable barrier.

Has difficulty physically accessing banking services in branch Li

z B

our

nem

out

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Usag

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“Iwanttotryanddomybankingonmyown…butthe bank isn’t making it that easy for me.”

Mary is 81 and a widow. Whilst she’s quite spritely for her age, she struggles with computers (her son has tried to teach her a number of times!). Fiercely independent, she is not willing to ask for help when she can still find a way to do it herself. She has been regularly popping into her local branch where ‘the girls’ help her to pay bills and ensure she has the right products. Recently she’s been told that the branch is closing and she’ll have to go elsewhere. Without access to transport, she’s not entirely sure what she is going to do. She’s trying not to think about it for the time being.

Digitally excluded

Mar

y Ta

unto

nRe

tail b

ankin

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Usag

e

“It’s ridiculous that I can’t get a new account.IhaventbeenabroadandIdon’tplanongoing,sowhyshouldIhavetobuyapassport?”

Lucy lives in rural Wales, about a 10 minute drive from the nearest village. There is a bank branch in the village, but it’s not Lucy’s provider, and is only open two mornings a week. As Lucy has severe osteoporosis she finds it difficult to get about in the larger town where her nearest bank branch is located, even if she is able to get a lift from a family member. Recently Lucy tried to open a new current account that she would be able to access through a local shop, meaning longer opening hours and the convenience of the nearest village. In her 70s, and having never driven or travelled abroad she hasn’t got either a passport or a driving licence and so was unable to complete the identification verification procedure.

Difficulties physically accessing branch and insufficient photo ID to open a new account

Lucy

C

lyd

ach

Reta

il ban

king

| Ap

plica

tion

“IfeellikeI am a burden on my children and reliant on them foreverything.Whilsttheysayeverythingisokay,I’mnotalwayssurewhatthismeans.”

Dhurjati lives in Bradford with her husband and grown-up children. She struggles with English and is also illiterate in both English and her native Urdu. She relies on her children to undertake all of her everyday banking arrangements, and to translate for her if she ever does go in to her local branch or needs to use a cash machine. She doesn’t really feel in control of her own financial situation and whilst she trusts her children, she feels like she doesn’t have the tools or skills to get more involved.

Dependency

Dhu

rjat

i B

rad

ford

Reta

il ban

king

| Us

age

“I feel like a criminalwhenItrytohelpmyparentsdotheirbanking…theydon’thelp,they[bankstaff]justmakeitcleartheydisapprove.”

Phil is in his 50s and has an informal caring relationship for both his parents (who he describes as having the first signs of dementia). He has never had to care for anyone and doesn’t really see himself as a ‘carer’ - more just ‘helping out’ or ‘doing what any son would do’. To support them, to regularly accompanies them to the bank to shift money around or manage their finances. He thinks that staff suspect him of ‘coercing’ his parents, as they give him dirty looks and ask difficult questions. He has become so worried about helping them with banking tasks that he now stands outside the branch and just hopes that his parents will be okay on their own. He has never been offered support or advice about taking out a power of attorney.

Caring for parents

Phi

l Le

eds

Reta

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king,

sav

ings

and

in

vest

men

ts |

Usa

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The Void 47

8. Conclusions and recommendations

8.1 Summary of key themesIt is easy to see access as a complicated amalgam of interlinked problems which, cu-mulatively, become nobody’s responsibility. In seeking to give an overarching, con-sumer-oriented structure to the issue we have hope we have created a framework for understanding the nature of different problems which enables consumers, firms and the regulator/government to better identify where the responsibility for driving change could lie.

With this understanding in place, it is possible to further refine thinking about cau-sality and responsibility by clustering specific access problems in different ways. The table below summarises the issues we documented in relation to a range of different types of subject area. Some of these are wider technological and societal changes affecting consumer behaviour, while some are to do with industry trends, and others are the result of specific regulatory measures intended to protect consumers and en-sure the efficient working of markets.

Identified access issue area Key challenges encountered

Online • Poorconnectivityandbroadbandsignal

• Lackofbasiconlineskills

• Lackofresourcestogetonlineathomeorlocally,forfree

• Lackofconfidencearoundonlinesecurity,andabilitytorecognisefraudulentactivityonaccount

•Noaccesstoabranchlocally

• Inabilitytoaccessabranchduetodisability

• Inabilitytousetelephonebankingduetohearingordexterityissues

•Difficultiesusingcashmachines,transactionalmachinesinbanksandChip&Pintechnology

Know Your Customer / Anti Money Laundering Legislation

• LackofconsistencyonapprovedformsofID

• Lackofflexibilityforthosewithoutapassportoradrivinglicence

• LackofusefuladvicetoaddressIDissues

• Lackofflexibilityandsupportaroundproofofaddress,especiallyforthosenewlyarrivedinthecountry,includingwealthy,savvyconsumers

Credit Reference Agencies and lending decisions

•Athincreditfilepreventingaccesstoappropriatecredit

• Lackofclarityoverrejectionforcreditproductstohelpfuturesearchesandtogainappropriatecreditinthefuture

•Difficultiesunderstandingtheconceptofcreditreferenceagencies,creditscoringandhowlendersmakedecisions

48 Mind the gap

Older Mortgage Borrowers •Refusaloflendingduetoinflexibleageassumptions,withoutaconsiderationofspecificneedsandcircumstances

•Alackofconsumerunderstandingaroundtheprocessofeligibilitycriteria,leadingtoconfusionaroundtherealreasonforrejection

Insurance •Difficultiesunderstandingthefulltermsandconditionsofaproductpurchased,leadingtoconfusionandalackoftrust

•Asenseofbeing‘pricedout’ofinsurance,eitherthroughexorbitantpremiumsoraninabilitytoseethevalueofcover

•Aninabilitytofindsuitableproductsprovidedbyspecialistproviders,evenforthemostsavvyofconsumers

•Acompletelackofproductsforthosewithmorespecificneeds,perhapsduetoillnessorage,orforexample,havingapastconviction

•Refusalofinsurancebyassociation,forexampletravellingwithsomeoneelsewithanillness

•Consumerstrappedinpoliciestheyareunabletoamendwithoutsufferingareductionincover

Identified access issue area

•Alackofclarityoverhowtoaccess,understandandimproveone’screditscore.Alackofunderstandingthat,unlikeotherareas,shoppingaroundforcreditcanbedetrimentaltoconsumers

•Higherthanaveragecostschargedtoaccesscreditthroughnon-mainstreamchannels

Key challenges encountered

Conclusions and recommendations 49

8.2 Whose responsibility is it anyway?It is easy to pair up a consumer problem with the financial services industry and as-sume that firms are the root cause of all the problems. If products are too expensive for consumers, then surely firms should just be encouraged to lower their prices?

This research, however, recognises that it is not always straightforward for firms to deliver the best products and services to consumers at a price which is affordable. Indeed, it may be that by providing products and services for the most expensive customers, who pose a greater risk,that firms themselves end up shouldering the cost, or become less competitive. Furthermore, regulation and competition can prevent firms from working collaboratively to address gaps in the market, and ensure provi-sion for those customers who currently fall through the cracks. This report recognis-es the responsibility of firms to their shareholders and current customers alike, and acknowledges the need for others to play their part in facilitating the products and services which are required in order to tackle the challenges posed by access today.

Customers themselves are often not unrealistic about these challenges. Many of those we studied understood that not all firms will want to meet all consumer needs

– hence the need to shop around and find the products that best fit your individual circumstances.

However, what is clear is that in a large variety of different circumstances, some customers are experiencing gaps in service provision and are often struggling to find ways to solve their problems and/or find suitable and affordable products. In some cases, it is also difficult to see what would make some customers appealing to firms. In some cases, therefore, it might be the case that the market simply cannot find the business case to provide a certain product or service to a certain group of people. The research saw that where mainstream providers were leaving sectors that were associated with high costs of provision and low returns, these gaps were sometimes being filled by higher cost providers, for example door step lenders or unregulated, informal schemes, such as community ‘savings’ schemes. Sometimes these alterna-tives also seemed to be accompanied by less accountability and lower standards of customer protection than their high-street alternatives.

8.3 Improvised solutions Current solutions to access issues are often improvised, and reliant upon the actions of a few individuals, who often assume the majority of the risk involved. For the most part solutions involve family members lending a hand with online access, cash withdrawals or access to a bank account. Throughout the research we found people using partner’s accounts for the entirety of their transactional banking, relying upon neighbours and friends to help withdraw money, or asking adult children to set up new accounts and make payments online.

“Sometimes I ask my hairdresser to get some money out for me. It’s to pay her but then some more for me, as she can get to the cash machine a lot easier than me.” (Consumer, Great Yarmouth)

However we also encountered individual staff members from a variety of different firms bending the rules, both internal and regulatory, in order to help customers ac-cess the products and services they needed. Whether this be signposting to alternative insurance providers to enable the taxi driver with arthritis and other conditions to keep working, or agreeing to search for the name of an individual in order to see if their deceased husband had a bank account at their firm, such actions were reactions to the inflexibility of a system originally designed to protect both firms and consumers.

Both consumers helping out friends or relatives, those receiving informal support and those working in frontline positions who try to enable access are put at risk by their actions. That staff and consumers are forced to develop ad hoc, improvised solutions to their access issues shows the need for better acknowledgement of the scale of the problems associated with access, and the need for responsibility to be taken to help solve them.

50 Mind the gap

Access is considered as an essential element for all markets – for consumers to be able to engage successfully and to receive products and services that meet their needs. As such, appropriate access can be considered to be a key tenet of good and fair treatment of consumers in the financial services marketplace. Access should ensure that all consumers should have the ability to access appropriate financial products which are easy to use, regardless of their age, physical ability, geographical location or income. Current delivery does not provide to this principle, as many are depend-ent on informal support not provided by firms in order to cope with everyday finan-cial transactions and services.

ThoughtsfromtheauthorsAgainst a background of increasing focus on financial access and inclusion, it can be argued that the FCA has a pressing need to clarify its thinking about ‘access’: developing a robust understanding of the term’s relevance in a financial services setting, and identifying the regulatory implications. Financial inclusion, and access, now directly relate to the FCA’s objectives of consumer protection and competition, including within it support for more vulnerable consumers, encouraging a real degree of effective choice for consumers and clarity and transparency over products purchased, par-ticularly when it comes to terms and conditions.

In particular, the organisation needs to be clear about the distinction be-tween regulatory intervention and ‘social policy’ (i.e. as defined and imple-mented by government) – ensuring that there is a clear, shared understand-ing of the boundaries, and that no consumers experience detriment due to

‘falling through the cracks’.

There is an increasing focus on individual responsibility for financial resil-ience and sustainability, with consumers encouraged to save for their retire-ment and cover themselves in the event of serious illness and worklessness. With this in mind, there is much work to be done to ensure that consumers are able to access products which meet these needs, should they decide to take such a degree of responsibility for their own future. In addition, there is a need for the market to facilitate more effective choice, so that consum-ers can find those products which meet their needs and make an informed and effective choice about the best product for them.

The FCA is ideally placed to take responsibility for identifying those areas where the market is failing to provide customers with products and servic-es that adequately meet their needs. Yet the regulator must also consider whether choice on its own, as a factor for driving competition, is the only solution to access problems. Choice without effective advice, suitable prod-ucts and accessible tools to make effective and informed comparison, is not a solution to the access issues identified by this research. Not only must there be suitable products available, but they must also be easy to find, un-derstand, apply for and afford.

Responsibility must be taken for encouraging more innovation around in-formation provided to consumers and the comparison mechanisms they use. This research strongly points to the need for a full spectrum of providers to be involved in developing a response to the access issues identified, from policy makers to firms, consumer organisations and consumers themselves.

Conclusions and recommendations 51

9.1 Consumer sample and recruitmentAll fieldwork was conducted by ESRO between July and November 2015.

Depth interviews The research team conducted a total of 51 x two-hour depth interviews with indi-viduals who fell into at least one of the ‘in-scope’ access categories for the project. Prior FCA research had identified each of these groups as being more likely to ex-perience an access issue.

• Low income• People with disabilities• Unemployed people• Older people• Older mortgage borrowers• Those with low literacy / numeracy skills • People experiencing critical illnesses• People living in isolated rural areas• Travellers and gypsies• Refugees and asylum seekers• Those with English as a second language• Ex-prisoners• ‘Unintentionally’ homeless people• Victims of domestic abuse• Returning and current armed forces• International students• Care leavers

Focus groups We also conducted six discussion groups with individuals whose had had recent ex-periences that fell into the following issue areas:

• Recently rejected for a credit product • Recently encountered problems opening a bank account • Struggling to purchase appropriate insurance products • Recently turned down for a mortgage due to age (i.e. too old)• Currently helping a friend or family member with their everyday banking • Struggling to understand financial language and concepts Each focus group was made up of between six and eight participants. Two groups were conducted in central London, two in Birmingham and two in Leeds.

9. Appendix

52 Mind the gap

Whole sampleTo ensure that a broad range of experiences was captured, the research achieved a good geographic spread across the UK, with interviews taking place in England, Scotland, Wales and Northern Ireland.

The sample also achieved a balance between male and female respondents, and covered a wide range of ages, income levels, ethnic / religious background, family / marital status, housing tenure and work status.

All respondents were recruited to have responsibility for their money, apart from in those situations where dependency was the primary recruitment criterion. Participants were also recruited to have a broad spread of perceived abilities when it came to understanding and managing their finances.

All respondents were recruited to have experienced an access issue in one of the fol-lowing areas:

• Digital access (including difficulties using or accessing online services)• Identification (including issues encountered as a result of Know Your Customer

and Anti-Money Laundering legislation)• Credit • Mortgages (specifically older applicants)• Insurance On some occasions respondents had experienced multiple issues within a given area, or across areas.

In terms of respondents’ interactions with the industry, we ensured there was a broad spread of financial firms represented, including a range of the main banks, lenders and insurance providers.

9.2 Interview approach Both the depth interviews and the focus groups were structured around a detailed discussion guide, but were also designed to be open-ended and relatively flexible, in order to allow for unexpected insights as well as potentially sensitive issues to be discussed. As respondents were not recruited to have a strong understanding of fi-nancial products and services, the research materials were designed to be as clear as possible and written in ‘plain’ English.

The majority of the depth interviews were carried out in-home, with a view to es-tablishing trust and creating a relaxed atmosphere. Focus groups were conducted in hotel conference rooms.

Throughout the depth interviews and focus groups researchers sought to gain an understanding of each respondent’s full financial picture, including the full range of financial products currently and previously held.

Researchers then discussed access challenges and the detriment caused, both real and perceived, as a result. All five access areas were explored in detail, in order to capture unforeseen experiences and challenges in addition to those specified at the point of recruitment.

Appendix 53

9.3 Additional interviewsThe research team conducted 28 x interviews with experts, staff and representatives from a wide variety of organisations – including consumer and industry bodies, and specific financial firms.

The majority of these interviews were conducted over the phone, with a few carried out face-to-face. Each lasted between 30-60 minutes. Expert interviewees occupied an appropriate role within the target organisation and were briefed on the key areas of interest prior to the interview.

The sample for expert interviews included representatives from the following organisations:

• Age UK• Barnardo’s • CAB • Consumer Council of Northern Ireland • DOSH • Friends, Families & Travellers • Homeless Link • Joseph Rowntree Foundation • Macmillan Cancer Support• Money Advice Trust• National Numeracy• NUS• Passcard• Prison Reform Trust • Rees Foundation • Royal British Legion • Scope• Scottish Refugee Council• Stepchange • Toynbee Hall• Unlock • Viridian Housing

• Barclays • Building Societies Association • Experian • Federation of Small Businesses • Financial Ombudsman Service

54 Mind the gap

ESRO

+44 (0)20 7735 8040 contactus@esro.co.uk www.esro.co.uk